One of the biggest cryptocurrency trading platform, handling billions of dollars in trading volumes every day, has launched ETH/USD futures earlier today.
Without much of an announcement, a new market was opened at around 11AM London time that allows traders to long or short eth with a requirement of just 2% in initial margins.
That translates to margins of some 50x, meaning that with just 1 eth you can take a very risky bet of 50 eth, which would probably quickly lead to your liquidation.
The trading platform has offered ETH/BTC futures for some time, but ETH/USD was missing for unclear reasons.
That led to criticisms because one could not easily arbitrage or hedge on the platform where eth is concerned, but now without announcement they’ve added the dollar pair.
BitMex is a very old (in crypto years) trading platform that rose to prominence in 2014 for offering 100x bitcoin margins, the highest level ever.
The only other option at the time were China based exchanges, such as OKCoin, which offered only 20x. They, however, had considerably more liquidity than BitMex, which used to have significant spreads.
The closure of China based cryptocurrency exchanges left BitMex with effectively no competition, so attracting traders looking for high risks with their bitcoin volumes now rising to $3 billion for yesterday.
The platform, however, is unregulated as far as we are aware, but may have seen a further boost recently after the revived OKCoin (OKEx) saw a nearly half a billion dollars bitcoin short liquidation order go unfulfilled.
That may bring socialized losses back with a bang, but some suggest BitMex has better controls as they have limits on how many contracts a long or short position can hold.
As such, the timing of their launch of ethereum futures against the dollar might perhaps be their attempt to take advantage of some difficulties their competitors might be experiencing, but many might be wondering why it took so long.
Unlike CME or CBOE futures, those offered on Bitmex have cryptocurrency as collateral and are settled in cryptocurrency where relevant. For ETH/USD, however, it appears there won’t be any quarterly settlements, with the contract instead described as perpetual.