By The Numbers: A Bitcoin Bear Market Without BitMEX

Since the beginning of bitcoin, bull and bear markets have been a natural part of its growth. But as with anything that lasts a long time, the market has evolved, and so has the concentration of different things in the market. One of these changes has come in the form of funding rates and what part of it was controlled by different exchanges. In the last bear, BitMEX had proved to be a significant part of the bear market, but things have changed.

BitMEX dominance is falling

Now, derivatives have become more popular among bitcoin and crypto users in the past year. Nevertheless, they remain highly complex to the point that the instruments used to fund the calculations of different platforms can vary widely. This even reinforces the security structure of the derivatives on each platform.

Back in 2017/2018, when the bear market had taken hold, BitMEX had been at the forefront of the derivatives market. A report by Arcane Research uses the first 318 days after the start of the bear market in 2018, where it found that the crypto exchange had accounted for more than half of all derivatives volume at that time. It had also seen the accumulated funding rates now -0.46%, which today tells a much different story.

Funding rates from two cycle peaks | Source: Arcane Research

Over the years, however, the crypto exchange has lost its dominance of the derivatives market share. As more prominent competitors emerged, BitMEX has seen its share of the bitcoin rate drop to 3.3%, and its cumulative funding rate drop another 1.46% in today’s market. This means that the crypto exchange is now much less important to the bitcoin bear market than it used to be.

Impact on Bitcoin

Looking back at bitcoin’s performance in the perpetual markets, it appears to be the opposite of the recent bear market. The first example of this is that back in the bear market of 2018, BitMEX funding rates were at 0.46%. At this time, funding rates were highly volatile and the shorts mostly paid the shorts.

BTC recovers to $19,100 | Source: BTCUSD on TradingView.com

But in today’s market, the opposite has been the case. The report shows that shorting the BTCUSDT perp pair since November 10th will yield a return of 5.25% as of today. This goes against the 2018 trend, and now longs pay off shorts.

It is also important to remember that the funding rates from the last bear market were actually more volatile than they are today. For example, BitMEX had bottomed at -12.15% in accumulated funding rates during the cycle peak back in 2019.

Featured image from Coingape, charts from Arcane Research and TradingView.com

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