After months of dismal price action, Bitcoin (BTC) unexpectedly surged on Tuesday evening, jumping from $6,450 to $6,900 within minutes. While some were caught off-guard by this move, it has become apparent that the reason for the sudden spike in price seems to be BitMEX’s recent round of maintenance.
BitMEX Goes Down, Bitcoin Jumps Up
An unexpected change hit the crypto market yesterday evening when a derivatives trading platform called BitMEX went down for scheduled maintenance. BitMEX is known for offering BTC trading options, along with other cryptocurrencies. However, the platform needed to be taken down briefly, which is when Bitcoin coincidentally surged by upwards of 6%.
The platform was taken down yesterday around 9 p.m. EST. Once the platform shut down, Bitcoin spiked to almost $6,900. Since then, the coin gradually dropped down and is valued at $6,680.33 at the time of writing. Experts say that the two events are definitely connected, with Bitwise’s CEO, Hunter Horsely, stating that the shutdown sparked an interest in the purchase of Bitcoin.
According to Horsely, this is only a short-term increase in trade and is a well-known strategy to some eagle-eyed traders. Some investors are immediately purchasing BTC when maintenance starts, and later rush to sell their recently-acquired BTC as soon as the maintenance cycle has ended.
CoinRoutes’ CEO, Dave Weisberger, also commented by saying that the traders have spotted a serious arbitrage opportunity at the moment of BitMEX shutdown. According to Weisberger, Bitfinex took the lead and brought the coin to $6800+. However, Coinbase Pro was capable of catching up pretty quickly, and their clients even paid over $100 more for each BTC on the US-based exchange.
Bitcoin Expresses Old Behavior Once More
If you have been following Bitcoin’s progress for some time now, you might know that these drastic price changes are not unusual for the price of this asset. At least, they were not unusual back at the end of 2017, when BTC was worth just around $20,000 a piece. In the bear market of 2018, however, this is not that common of a behavior, and many believed that extreme price variations, like the one seen on Tuesday, had completely dried up.
Differences in prices on different exchanges are a big opportunity for those who are quick to trade since they can buy coins for a cheaper price at one exchange, and then sell them for more on another. It is not a bad way to make some extra profit, but the declining state of the crypto market made arbitrage opportunities appear few and far between.
Some users are reporting difficulty in logging in. We are diagnosing. We have postponed resumption of trading for 5 minutes to 01:35. We will report back shortly.
— BitMEX (@BitMEXdotcom) August 22, 2018
As for BitMEX, it finished its maintenance as expected, but there were several reports of troubles with logging into the accounts after the maintenance was done. The platform even confirmed it itself several times on its own Twitter account. However, the problems have been taken care of relatively quickly, and trading on the platform has since returned to normal.