BitMEX Data Glitch Sees Bitcoin Price Temporarily at $8,000, What Happened?

One of the most popular Bitcoin exchanges in the global market has experienced a data glitch in their system which sent the price of Bitcoin from $6,500 to $8,000 within minutes.

Given that no trades were executed at the $8,000 mark, it is highly likely that the sudden jump in the price of Bitcoin was merely a visual bug. But, investors in the cryptocurrency sector have criticized the exchange, stating that such abnormal behaviour may decrease the probability of a Bitcoin ETF being approved in the future.

Visual Glitch But Bad Look For the Industry

Alex Kruger, a respected trading analyst at a large FX market maker, said that the surge in the price of Bitcoin demonstrated by BitMEX was a glitch, possibly caused by an error in the trading engine of the exchange.

“Data glitch means didn’t trade,” Kruger said, adding, “Can sometimes see this happen on poor data feeds such as Ameritrade’s stocks feed after hours.”

Don Alt, a popular cryptocurrency trader known for his technical analysis shared across various social media platforms, stated that the hiccup in the system of BitMEX demonstrated the necessity of alternative exchanges, in case trading platforms demonstrate instability and volatility in their systems.

“BitMex please, stop teasing. Really bad look, nothing was traded up there making this a visual bug most likely. The entire market responded by rallying $40 anyways. Another reason to add to the book of ‘Why should we have alternatives,’” Don Alt said.

Since visual errors are not equivalent to executed trades, it can be said that no trader was affected by the glitch shown by the BitMEX trading platform on August 24. But, BitMEX is a major Bitcoin trading platform that has more than 40 percent market share of the Bitcoin-to-USD market.

As such, the expectations from traders and investors in the cryptocurrency sector towards BitMEX are high, demanding stability and highly performing systems.

Most recently, Arthur Hayes, the CEO at BitMEX, revealed that the exchange has become the operator of the most liquid trading pair in the Ethereum market.

“In under 1 month, the BitMEX 50x leveraged ETHUSD swap has become the most liquid Ether / USD product. Come get some,” Hayes said.

Considering the influence BitMEX has over the Bitcoin and Ethereum exchange markets, it is customary for users to express their negative stance towards one of the most widely utilized trading platforms demonstrating instability in a period of uncertainty.

SEC Doesn’t Want to See ETFs Based on Exchange Price

Throughout the past two months, the SEC has rejected a total of 10 exchange-traded funds (ETFs), citing an issue with the decision of the ETF operators to base the price of the funds to exchanges and futures markets.

Earlier this week, Bakkt, the digital asset exchange created by Microsoft, Starbucks, and New York Stock Exchange, said that finding trusted price formation is important in facilitating the growth of Bitcoin in the broader financial market.

“The concept of ‘price discovery’ might sound bland for something as exciting as Bitcoin. However, trusted price formation is a fundamental part of advancing the promise of digital currencies,” the Bakkt team said.

As long as technical and security issues continue to emerge in the cryptocurrency sector, regardless of their magnitude, the SEC will not be comfortable in allowing ETFs to be based on the price of Bitcoin established by exchanges.