March 2020 will be remembered as acatastrophic year for the global economy. Fears of an economic recession causedby the COVID-19 pandemic have driven the stock market and other investmentvehicles into a freefall. Unfortunately, digital assets were not exempt fromthis reality.
Notably, a Bitcoin flash crash pushed theprice below $4,000 for the first time since December 2018, according to CoinMarketCap.The implications weren’t just for real-time traders. Bitcoin derivatives, apopular investment product in the space that, among other things, allowstraders to take long and short positions on the currency, plummeted as BitMEX,the most popular derivatives exchange before the crash, couldn’t handle thesudden price fluctuation.
Now, Bybit, a competing global derivativestrading platform, has stepped up, offering new functionality and a promise forreliability that serves as a contrast to the recent challenges at BitMEX.
Indeed, Bybit CEO Ben Zhau was quick to enterthe conversation, tweeting the platform’s 24-hour stats, in anot-so-subtle jab at its struggling competitor. However, Bybit isn’t justoffering tweets. On March 24th, Bybit announced the addition of Tetherperpetual contracts to its other crypto-backed investment products.
This new Tether (USDT) offering allowsinvestors to hold both long and short positions at the same time while managingdifferent leverages. When operating in cross-margin mode, traders can avoidhaving positions auto-liquidated during market volatility, or they can enable“auto margin replenishment,” where Bybit automatically adds a user’s existing fundsto their margin balance.
Just like Bybit’s existing perpetualcontracts, USDT contracts don’t expire, and the price is linked to theunderlying index, providing traders with full price accuracy at a time whenmany are rightly skeptical about the efficacy of some critical data.
At the same time, Bybit announced severalother platform enhancements, including:
- A take-profit/stop-loss setting.
- Faster position open and closefunctionality to allow quick trades during market volatility.
- The ability to flip positionsdirectly on the chart.
- More competitive margin tradingrequirements.
- A shared insurance fund fortraders launching multiple contacts.
These new features are immediately availablefor Bybit users, giving them a unique opportunity during these uniquely chaotictimes. As financial markets of every kind prove that instability is, to someextent, the new normal, investors are looking for signs of reliability from theplatforms where they navigate this challenging space.
What’s more, both the establishedfunctionality and the additional features place Bybit in stark contrast to thechallenges facing BitMEX.
BitMEX Melts Down
Bitcoin’s flash crash prompted more than $700million in long liquidations before the platform enacted a “circuit breaker,” astock market feature that pauses trading when prices decline too rapidly. Thecriticism was unanimous. As one Twitter user wrote, “BitMEX ceased to be a full functioningexchange for about 18 hours.”
BitMEX has offered a range of explanations forthe incident, including a pair of DDoS attacks that rendered its platforminoperable at a critical time. Of course, having already endured a devastatingdata breach in 2020, identifying a cybersecurity vulnerability as the culpritis problematic. Taken together, many crypto traders are skeptical of theexplanations emanating from BitMEX, making the platform’s incident both apractical and a PR disaster.
Consequently, while Bitcoin’s price has inchedhigher – it’s currently trading at just over $6,000 at the time of writing– Bitcoin derivatives are seeing a realignment, as other platforms striveto step up where BITMEX has fallen.
BitMEX has an uncertain future ahead, as itnavigates the problematic, costly, and uphill battle of restoring customerconfidence and repairing its technological capability. Meanwhile, itscompetitors are doing everything they can to put forth the most compellingplatform possible. The result is a realignment among crypto derivativeplatforms as they work to achieve dominance in the crypto investment space.
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