With the BitMEX shutdown, an era is coming to a close. For 11 years, the exchange was the place to be for those on the ground floor of Bitcoin and Ethereum perpetual futures, but it is now putting an end to its operations.
Why BitMEX Chose to Shut Down
The move is a case in point for the kind of headwinds the industry is up against. In a statement, BitMEX pointed to a lack of profit and trading as the reasons for the closure. A full review of the business and the state of the market left the company with little option but to call it quits. The host of The House Of Crypto put it plainly: with volumes so low, it is no longer tenable to keep a platform like this profitable.
It is a story you see with other exchanges as well; in today’s market, many are seeing their numbers go down. The review made it clear that being a centralized exchange is a hard road to travel right now. When the market cools off and activity dries up, making ends meet is a tall order. BitMEX is proof of just how tenuous the whole model can be when enthusiasm wanes.
Historical Patterns: Exchange Shutdowns and Market Bottoms
There is a pattern in the crypto world: when a large exchange goes under, it is usually a sign that the market has found its floor. The House Of Crypto has pointed to the likes of Mt. Gox, BitGrail, and FTX as examples; each one fell by the wayside at or around a major low, right before things turned around. In a way, they clear out the weaker positions and put an end to the prevailing mood.
Take Bitcoin for instance. It is sitting at $65,400 now. That is a 12-13% gain since the start of June, but it has not come close to where it was in the 2021 run-up. With the added context of BitMEX’s closure, it looks like we could be in a bottoming process, with a comeback on the horizon.
Sentiment Metrics Suggest a Turning Point
A look at the numbers from Into the Cryptoverse shows that, by the measure of social historical risk, we are seeing the least amount of crypto interest in a while. The House Of Crypto has noted that such disinterest is no stranger to what comes before a big shift in the market; once the majority have made their exit and apathy sets in, you can be near a bottom.
There is some corroboration for that. Altcoin Daily has put together an analysis of the Clarity Act and found a good deal of negativity from those who are still in the game. The expectation is that there is more downside to go. It is not unlike the kind of thing the Wall Street Cheat Sheet describes: a progression from anger and despondency to a point where prices can finally hold steady.
Then you have the on-chain side of things. Metrics like the Bitcoin MVRV percentile and the TBBI are pointing to accumulation. In other words, as the weak hands get out, the long-term holders are picking up the pieces, which is how a bottom is usually made.
Source — The House Of Crypto: https://www.youtube.com/watch?v=NGT38B0pTxg
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