BitMEX4 months ago
News Editor BitMEX’s rise and decline: perpetual swaps, the March 12 outage, and the user migration to Bybit
WuBlockchain’s latest podcast revisits BitMEX through a conversation with hedge fund manager Kuange, who described how the exchange helped turn perpetual swaps into a workable crypto market structure and later lost its edge under regulatory pressure, slow product changes, and weaker operations. He said BitMEX solved key problems in early crypto derivatives by combining perpetual contracts with funding rates, mark prices, insurance funds, and auto-deleveraging, allowing liquidity to gather in one market and making the platform a major venue for price discovery during the bear market.
The discussion also covered the March 12, 2020 crash, when BitMEX briefly went offline as Bitcoin stopped falling near $3,800. Kuange said the outage objectively interrupted cascading liquidations, though whether it was intentional cannot be proven from the outside. He also argued that inverse contracts, which used Bitcoin as collateral, made long positions particularly vulnerable because traders were hit by position losses, falling collateral value, and amplified loss ratios at the same time.
In his account, BitMEX then lost users as regional restrictions tightened, withdrawals remained cumbersome, and the market shifted from BTC-margined inverse contracts to USDT-margined products. Bybit benefited by closely copying BitMEX’s early interface and product design, then moving faster into spot, wealth products, and a broader exchange model. Kuange said the era in which offshore exchanges expanded mainly through regulatory arbitrage has largely passed, while perpetual swaps still need work in small-cap markets where extreme funding rates and manipulation can distort hedging and price discovery.
