BitMEX Ends Year With 13,000 BTC In Its Insurance Fund

BitMEX ends the year with around 13,000 BTC in its insurance fund which is a 61% increase compared to last year’s levels, the latest crypto news show. The popular exchange has been building out its Insurance Fund and now added this amount of BTC, reaching a total of just over 33,491 BTC as of December 30.

This is an equivalent to 0.1% of the total Bitcoin in circulation based on the data available online.
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The fund, which the cryptocurrency exchange has set up to ensure that liquidation orders related to leveraged positions are filled, ended 2018 with almost 20,800 BTC. In other words, this means that the fund has seen a 61% increase since the start of 2019.

As a crypto derivatives exchange, BitMEX ends the year with success. It set up the fund to give margin traders certainty that they will receive their winnings. The simple logic behind the fund shows that in leveraged trading, market participants can make bets that the price of an asset can go up or down in multiples. The idea is to amplify the potential profile when a correct bet is made.

This is why BitMEX ends the year with 13,000 BTC as a reassurance for its traders that it can make their profits a reality. In fact, the derivatives exchange has developed a system where the insurance fund grows in a liquid market and is signalled by a narrow bid/ask spread.

According to Skew – an analytics firm tracking derivatives products – BitMEX ends the year as the most liquid exchange among the top exchanges that offer derivatives trading. The high liquidity that is enjoyed by BitMEX, as per Skew’s research, presents a plausible explanation for why the fund has been growing.

Meanwhile, BitMEX recently stated the following in the Bitcoin news:

“The Insurance Fund grows from liquidations that were able to be executed in the market at a price better than the bankruptcy price of that particular position.”

All in all, BitMEX ends the year with success and despite some of the criticism geared around the lack of transparency of its insurance fund, the exchange is working good and ramping up its user base.

When it comes to other insurance funds, at least three top derivative exchanges have them, including the names of Deribit, Huobi and OKEx.