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The legal problems of the BitMEX derivatives exchange with US regulators impacted the price of bitcoin as DeFi gave Ethereum miners more revenue than ever.
- Bitcoin (BTC) traded around $ 10,582 at 20:00 UTC (16:00 ET). Slipping by 1% in the previous 24 hours.
- Bitcoin 24 Hour Range: $ 10,427- $ 10,931
- BTC below its 10 and 50 day moving averages, a bearish sign for market technicians.
Bitcoin’s price was as low as $ 10,932 on spot exchanges like Coinbase before quickly plummeting 4% in two hours to $ 10,427. It subsequently bounced back a bit to $ 10,582 at press time.
The drop coincided with the announcement that the BitMEX crypto derivatives headquarters have been formally charged by US regulators for unregistered trading, among other transgressions.
“The news that BitMEX has been submitted to a lawsuit by [Commodity Futures Trading Commission] has encountered large-scale selling pressure, “said Denis Vinokourov, head of research for crypto brokerage Bequant.
Read more: BitMEX “attempted to evade” US regulations, CFTC, DOJ charge
“This is great,” Vishal Shah, an options trader and founder of the Alpha5 derivatives exchange, said of the CFTC announcement. However, Shah has noted BitMEX’s waning influence on the market since March, when over $ 700 million in liquidations helped bring the price of bitcoin down to $ 3,854 in spot trading.
“BitMEX has slowly and steadily bled out open interest since March,” Shah said. “This news could accelerate that narrative, but I don’t see it’s a systemic risk at this point if there’s an orderly resolution.”
A number of new derivatives venues, most of which provide no access to anyone in the US, are one of the reasons for BitMEX’s decline in the market, Bequant’s Vinokourov said. “The overall importance of BitMEX to the wider ecosystem is not as critical as it was a few years ago,” added Vinokourov. “Not only have many other exchanges caught up with BitMEX liquidity and order book depth, but a widely publicized technology issue earlier this year also impacted the venue’s reputation among the largest cryptocurrency banks. “.
However, the liquidations on BitMEX helped push the bitcoin price lower on Thursday, as $ 15 million in sales liquidations in the past 24 hours wiped out long-oriented traders on the derivatives platform, similar to a request for margin in traditional markets.
Outside of BitMEX, macroeconomic events could lead to selling pressures at the October opening, according to Andrew Tu, executive of cryptocurrency firm Efficient Frontier.
“Bitcoin has been stuck in the $ 10,000- $ 11,000 range since its decline in early September,” Tu noted. “The elephant in the room at this point is pretty much the macro climate, with [U.S.] upcoming elections and the inability to compromise on a fiscal stimulus between the House [of Representatives] and Senate, “he added.
Ethereum miners collect record commission income
Bequant’s Vinokourov has been more optimistic about the future of the cryptocurrency market, particularly with progress in the long and torturous Ethereum update. “The underlying fundamentals are positive, especially for ETH given the very recent launch of ‘Spadina’, the final testnet before the updated mainnet version of the Ethereum blockchain,” added Vinokourov.
The second largest cryptocurrency by market capitalization, ether (ETH), fell on Thursday to around $ 353 and slid 0.83% in 24 hours at 20:00 UTC (16:00 ET).
Read more: Braintrust raises $ 18 million to bring DeFi thinking into the Gig Economy
As a growing number of users adopt decentralized finance, or DeFI, on Ethereum, miners are harvesting more revenue from the network than ever. Miners’ revenues from fees charged for using Ethereum averaged 38% in August, a record high. It was surpassed in September, when revenue from miners’ fees hit another record, at 48.5%.
Jean-Marc Bonnefous of Tellurian Capital, who has invested in the crypto ecosystem since 2014, said some of the outrageous returns within DeFi are appealing to users despite the high transaction fees that miners are pocketing.
“Even with high gas costs on Ethereum, some of the net returns available on DeFi are still quite attractive compared to the alternatives,” said Bonnefous. “The basic problem, however, is that these returns are not sustainable in the long run, whatever the costs and challenges of Ethereum.”
Other markets
Digital assets on CoinDesk 20 are mixed Thursday, mostly in the red. A winner at 8pm UTC (4pm ET):
Notable Losers at 20:00 UTC (16:00 ET):
Read more: Startup supported by Uber co-founder, president of Poaches CoinList
- Oil fell 3.2%. West Texas Intermediate Crude Oil Barrel Price: $ 38.62.
- Gold was down 1% and at $ 1.903 at press time.
- Yields on US government bonds fell on Thursday. Yields, which move in the opposite direction to the price, fell more over the decade, dropping to 0.676 and in the red to 1.6%.
