BitMEX recently suffered an attack that led to the liquidation of $1.2 billion.

Despite the huge amount of money users lost, the data reveals that the platform is still vulnerable to tampering.

An overview of the crypto derivatives market at BitMEX:

BitMEX is one of the largest and most liquid Bitcoin and crypto derivatives trading platforms around the world.

Data from Skew reveals that in the past 24 hours, Seychelles-based platform BitMEX reported over $3 billion in bitcoin futures trading volume.

The large amount of funds traded on this platform allows it to occupy the fourth place among the largest exchanges of Bitcoin futures trading platforms as shown by the data below:

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While competition is fierce in the crypto derivatives market, BitMEX continues to dominate the open interest generated by Bitcoin futures.

Open interest is the total number of derivative contracts outstanding that are not yet settled.

Given the importance that the derivatives giant BitMEX, founded by Arthur Hayes, has in the cryptocurrency market, it has recently been the target of a bot attack.

Samuel Reed, chief technical officer of BitMEX, confirmed that the platform was the victim of an attack on March 12, which led to a 25-minute outage.

BitMEX is accused of contributing to the decline of Bitcoin … and the platform responds

The incident drove Bitcoin to as low as $3,700, wiping $1,800 off its price in a single day.

The data reveals that nearly $1.2 billion in bitcoin long contracts were liquidated during the bearish rally.

Although BitMEX said it is working on improvements to prevent bad actors from attacking the platform again, it still appears to be vulnerable to market manipulation.

“Pump and Dump” and benefit from mass liquidation:

The Bitcoin Index on BitMEX, also known as the BXBT Index, is a composite that reflects the average price of Bitcoin using volume data obtained from multiple sources.

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Index sizes are calculated via an API connection from the following trading platforms:

Bitstamp, Bittrex, Coinbase, Gemini, Itbit and Kraken.

According to BitMEX, various tools are used to identify skewed and anomalous data that is being ignored.

BitMEX confirmed this indicator by saying:

Calculating the volume of the indicator removes components with insufficient trading volume.

If the platform will lose service and no trades have been printed for more than 15 minutes, BitMEX services may automatically remove that component from the indicator until trading resumes.

Although BitMEX argues that its proprietary mechanisms help prevent market manipulation, the fact that more than 52 percent of data is pulled from Coinbase makes its claim highly questionable.

Coinbase Pro’s low levels of liquidity suggest that it only takes $2.8 million, roughly 430 bitcoins, to move the bitcoin price by 1.5 percent.

Here, the possibility of pumping and pumping in the price of Bitcoin appears.

Under this premise, Bitcoin “pump and dip” in Coinbase while trading BitMEX becomes a very profitable strategy.

It is not known if anyone is currently carrying out this form of market manipulation, but if so, it would not be the first time this has happened.

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Where in mid-July 2019, a trader placed a sell order on Bitstamp for 15,000 ETH.

The massive oversupply triggered a 30% crash that pushed the price of Ethereum to $190 in a matter of minutes.

During that time, BitMEX relied heavily on Bitstamp’s price.

As a result, the offload caused the immediate liquidation of more than $164 million of long positions.

Now that more than 50 per cent of the price data for the BXBT index has been taken from Coinbase, a similar event could happen in the future.

Considering that up to half of BitMEX’s revenue comes from liquidation.

The platform appears to be well placed to liquidate its users by placing bookable orders on the Coinbase platform.

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