volatility, bitmex

Arthur Hayes, the CEO of the Bitcoin Mercantile Exchange (BitMEX) which is recording billions of dollars in daily trading volume, thinks there will be extreme volatility in the Bitcoin market during the rest of 2018. He believes that the July 2018 Bitcoin rally which started with a price rise from USD 6,200 to USD 7,500 will be similar to the April-May 2018 rally where Bitcoin prices rose from USD 6,500 to USD 10,000. He says this is a strong rally with good volume and Bitcoin’s price could rise to the USD 8,000-10,000 range, but thinks Bitcoin will crash after that. Arthur Hayes says, “I would like to see us test USD 5,000 to really see if we put a bottom in”.

At the beginning of July 2018, Arthur Hayes said Bitcoin will hit USD 50,000 by the end of 2018, but not before bottoming around USD 3,000-5,000. It appears that based on the recent rally he has revised his expected bottom price significantly upwards. Regardless, Arthur Hayes is painting a picture of extreme volatility in the Bitcoin market.

BitMEX thrives on volatility, since if the market moves quickly they can liquidate trader’s accounts who made the wrong bets. For example, during a 15 minute period when Bitcoin’s price rose from USD 6,800 to USD 7,250 BitMEX liquidated USD 230 million of short positions. Arthur Hayes stresses that “for every long, there is a short, so there’s not an imbalance of shorts persay”. Without actual data, this statement might be debatable, since Bitcoin’s market has been persistently declining throughout most of 2018, which might have induced traders into the habit of shorting more often than going long.

Regardless, the more Bitcoin price volatility, the more opportunity to make money for traders on BitMEX and BitMEX itself. So perhaps it is not surprising that Arthur Hayes is calling for incredible volatility in either direction, since that will motivate BitMEX traders to enter into both long and short positions, which will increase BitMEX’s volume.

Arthur Hayes expects volumes on cryptocurrency exchanges worldwide to pickup as the ongoing rally gains steam, and as people come back from summer vacation. He says BitMEX has seen increasing volume during the 2018 bear market when normal crypto exchanges saw major volume declines. This is despite BitMEX not being available to traders in the United States.

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