Over the years we’ve seen various bitcoin exchanges compete for dominance over the USD markets. Mt.Gox used to be the top BTC/USD exchange for volume until they went bankrupt and lost everyone’s money.
After the fall of Mt.Gox, Bitstamp took the lead as the USD market mover until they got hacked to the tune of $5M. The Bitstamp hack kicked off the new year of 2015 and sent the price of bitcoin into capitulation falling as low as $155. This signalled the bottom and nine months of accumulation before the next bull trend.
Once Bitstamp got dethroned, Bitfinex stepped in to pick up the slack. Many traders enjoyed Bitfinex for their user interface and margin trading. Then Bitfinex started having their own series of problems such as a hot wallet hack of 1400 bitcoin and a major glitch in their trade engine that led to a flash crash down to $162.
In spite of having such problems, Bitfinex managed to stay the top USD bitcoin exchange until their most recent hack of $60M. All traders took a 30% haircut yet Bitfinex has been making strides to reimburse their clients with a compensation plan.
BitMEX Takes the Lead
After the Bitfinex hack, many traders were scrambling to find a new USD exchange. Most BTC/USD exchanges lack the ability to trade on margin, which limits the amount of strategies that can be used.
BitMEX has since become the top exchange for USD volume. The irony is that their markets don’t actually offer USD withdrawal/deposits and they can’t serve U.S. customers due to regulatory hurdles. They offer synthetic futures contracts that allow traders to hedge into USD value.
Yesterday BitMEX pushed $5.6M in trading volume for their USD contracts, with a total of $160M over the course of the month.
6 Benefits to Using BitMex
BitMEX is one of the most sophisticated bitcoin exchanges in the world, with a variety of interesting features. I generally like to use BitMEX for scalping due to its low fee structure. Here are a list of benefits for using BitMEX.
- Never been hacked: They manually approve withdrawals once a day for maximum security. Although this may be more inconvenient than an automated hot wallet, it makes it difficult for a hacker to game the system.
- High Leverage: Their platform offers the highest leverage in the industry, which means traders can reduce counterparty risk by keeping less coins on the exchange. Just keep in mind that using leverage unwisely can lead to some heavy losses.
- Passive Income: Market makers get paid fees for adding liquidity. It’s also possible to get paid regular swap fees when trading, depending on the rates.
- Solid Trade Engine: BitMEX has a bank-grade trade engine that has zero downtime or glitches. They also have a clean and easy to read user interface.
- Low Fees: Market takers pay 0.075% fees, which is lower than most USD exchanges in the industry.
- Futures Market for Altcoins: BitMEX is the only exchange to offer high leverage futures contracts on a variety of different altcoins.