BitMEX
BitMEX Review 2023: An Expert's Comprehensive Analysis
3.5
3.5
4
3.25
3.25
Overview
General
Fees
Customer service
Requirements & Accessibility
Pros
Cons
Key Takeaways
Origins
Introduction
As we continue our deep dive into exchanges big and small, we are starting to enter into more unknown territories. Next up on the list is Bitmex, a lesser-known platform best known for offering institutional-grade cryptocurrency derivatives aimed at and built by veteran traders in the industry.
Its paltry offerings of actual coins is a big turn-off for some investors, but its reputation for high liquidity and advanced trading features have still managed to gain it an established user-base.
But what is it like to actually use, and does it deserve to stand shoulder-to-shoulder with the greats? Join CoinScan as we dive deep and find out!
History
Bitcoin Mercantile Exchange (Better known as BitMEX) was founded in 2014 by Arthur Hayes – a banker and American entrepreneur. He was joined at the time by American and British businessmen co-founders Saumuel Reed and Ben Delo (more on them later).
Before setting up the exchange, Hayes was a trader at both Deutsche Bank and Citigroup, and despite his traditional finance background, is an outspoken voice in the DeFi sector, writing staunch articles on regulation in the space, criticizing TradFi institutions and the need for decentralization to disrupt them, as well as making predictions of Bitcoin’s market activity (such as correctly speculating that it would fall below $3000 in 2019).
Despite two thirds of its founders being American, Bitmex is actually registered in the Seychelles (a very crypto-friendly location) and headquartered in Hong Kong.
In July 2015, the company completed a round of investment for an undisclosed amount and then soon afterwards was inducted into an accelerator program by SOSV batch 8 Chinese venture capital accelerator, which provided labor and financing in exchange for (again an undisclosed) amount of equity.
The site is known to have been the first site to introduce Bitcoin and other altcoin trading futures contracts in 2016, which allowed investors to trade the digital asset at a specific price on a future date, making it a welcomed option among advanced traders at the time, and to date its most popular feature.
The site is also available worldwide, apart from the US (which is pretty typical due to their complex trading laws) and all other countries that are sanctioned by the FCA, like North Korea and Cuba and Iran.
The company launched its own native BMEX token on December 21 2021, which to date has no circulating market cap available to view, but does have a fully diluted valuation of over $243 million, but a fairly poor daily volume of $46,000 for a global exchange currency.
Shortly afterwards BitMEX announced that the launch had brought over 50,000 new members to the platform.
The site has also come under some scrutiny and its fair share of controversy (which will be covered in detail in a later section). The cliff notes though are as follows:
In July 2019, it was suggested that the exchange was involved in illegal activities.
In addition, in 2020 all three co-founders were indicted by the US government for violating the US Bank Securities Act. This became a long, and drawn out legal case, and has marred the rise of the exchange ever since.
User Experience
Usage and Popularity
As mentioned, BitMEX keeps its cards very close to its chest when it comes to disclosing critical data, which has generated some level of criticism due to a lack of transparency.
It is impossible to know exactly how many individual users are active on the site, but it is speculated to be north of two million worldwide. That is except for the US - we sound like a broken record at this point, but due to its complex trading laws, the site (along with many others) cannot operate there.
BitMEX was never going to win any awards for its diversity of digital assets, currently offering only 10 coins and 11 trading pairs available on the exchange (with the usual suspects of Bitcoin, Ethereum and XRP leading the charge).
However, this is because BitMEX draws in users with a trio of factors:
Firstly, it allows huge margin leverage on all of its assets (which in turn allows users to trade with more value than they have in their account, effectively borrowing from the exchange itself), going as high as 100x on primary assets such as Bitcoin.
Secondly, it employs the aforementioned Futures contracts on many cryptos including Bitcoin and Ethereum, permitting users to trade on predicted prices of the digital assets in the future, an increasingly popular feature.
Lastly, and perhaps most importantly it offers derivatives trading (which means investors can trade the price of crypto assets without actually owning them, maximizing potential gains while minimizing risk).
In addition to derivatives and margin trading, Bitmex also offers the classic advanced features designed to satiate the more veteran traders, such as stop loss and take profit orders, market orders, limit orders, and conditional orders, giving those in the know more flexibility with trades.
Out of all the services offered, the derivatives aspect undoubtedly seems to be drawing in most of the crowds. At the time of writing, the trading volume on direct assets was a paltry $336,934.44 over 24 hours, whilst derivatives trading was over $568,982,230.91 for the same time period.
Clearly traders know what they like.
Ease of Use and Design
The design of the BitMEX website focuses on reducing complexity and increasing usability for its users.
The layout of the homepage is simple and uncluttered, making it easy for trades to find what they are looking for, and the trading page has been designed to be intuitive and straightforward, featuring detailed charts and a wealth of information about each order placed.
The intuitive UI also allows users to navigate between trading markets with ease, as well as boasting a number of tools that can help traders track their holdings and analyze past trades.
The trade-off is that the platform favors function over form and sacrifices design quality as a result, opting for the boring and basic; lots of black with the occasional splash of red and blue, and frankly yawn-inducing font choices that make it look like a website ripped from the mid- 2000s.
That said, most traders want something that is going to make them profit rather than look pretty, but we would be remiss if we didn’t point out that other sites have done similar but made it look better, (such as KuCoin, Kraken and Coinbase).
It does also have a useful BitMEX Academy designed to help new users get familiar with the nuances of trading, which is a really nice touch, but there is minimal hand holding when it comes to the site itself.
This means that for those unfamiliar with advanced trading who didn't school themselves first, the platform could be pretty overwhelming, and as such there are certainly better options out there to get started with.
Customer Support
BitMEX customer support is a mixed bag.
On the plus side the team is available 24/7 and can provide assistance in multiple languages, by highly experienced staff who are trained in the nuances of the platform and its specific services. Users can access support primarily through the dedicated email address for specific queries.
However, the response time to emails can be slow, and some complaints have been made about the support team’s lack of responsiveness or helpfulness when dealing with issues.
Additionally, there appears to be no live chat feature, and telephone support continues to be the elusive Unicorn of assistance features. We can forgive the telephone thing, but not having live chat is frankly a bit poor in this day and age.
For general issues BitMEX does offer a comprehensive knowledge center on its website. This provides users with access to various tutorials and guides which can help them better understand the platform and how to make the most of their trading strategies.
Customers can also find answers to common questions about BitMEX in the FAQ section. The knowledge base is regularly updated with the latest information, ensuring that customers are always up-to-date on any new developments or changes.
Overall, BitMEX customer service isn’t the best, despite the staff being well trained for the most part. Slow response times and a lack of live chat make it tough to recommend.
Fees and Promotions
Fees
Most exchanges charge fees to keep the lights on, and here BitMEX is no different. However, at the moment things aren’t as simple as they seem (in a good way).
On spot trading, the platform typically offers a taker fee of 0.075% for all trades and a maker fee of 0.025%. However, currently the site is offering an ongoing promotion where there are zero charges for either maker or taker fees, which is a massive plus.
On derivatives things are all pretty standard fare, with the site offering a standard trading fee structure across all derivatives products to keep things simple. Their maker charge is 0.02% and their Taker fee is 0.075%.
They do have a table that can be viewed by high volume traders to see what Maker / Taker discounts they can receive based on their trade levels, which can be accessed here.
In addition, there is a separate settlement fee of 0.05%, which applies only to futures positions that are not closed before the expiry date, and lastly, BitMEX charges its users an additional insurance fee of 0.035%, which helps protect traders from extreme price movements by providing liquidity during times of reduced market liquidity or high volatility.
When it comes to deposits, there are no charges with Fiat, but it will offset any bank charges onto the customer, and these vary depending on method used and geographic location.
In terms of crypto deposits, BitMEX offers its users a variety of deposit fees, depending on the type of cryptocurrency being used. For Bitcoin deposits for example, BitMEX charges a flat fee of 0.0005 BTC per deposit; for other cryptocurrencies, the exchange charges a fixed fee that varies depending on what coin it is.
In terms of withdrawals, there is a fee which varies depending on the currency being withdrawn, but typically ranges between 0-0.0003 BTC (or equivalent).
All in all, BitMEX fees are highly competitive when compared to other major cryptocurrency exchanges. The fees are transparent and easy to understand, making it easier for traders to manage their trades and budgets.
Comparison
BitMEX and BitMart are both established platforms in the cryptocurrency trading world, offering users avenues to buy, sell, and trade a myriad of digital assets.
As prominent exchanges, they prioritize the security and efficiency of their operations, deploying advanced protective measures such as encryption, cold storage, and two-factor authentication.
Additionally, both platforms cater to a global audience and have attracted a significant user base due to their user-centric features, advanced trading tools, and commitment to maintaining the liquidity and stability of their respective markets.
BitMEX is primarily known for its derivatives trading, particularly Bitcoin futures contracts, offering traders the opportunity to engage with high leverage, sometimes up to 100x. Its interface, tools, and primary services are tailored towards experienced traders familiar with derivatives and margin trading.
BitMart, on the other hand, provides a broader spectrum of trading services, including spot trading for a wide range of cryptocurrencies.
While BitMEX mainly caters to those interested in leveraged Bitcoin positions and contract-based trading, BitMart offers a more diverse cryptocurrency portfolio and is structured to cater to both newcomers and experienced traders in the crypto space.
Safety Essentials
Security
For hackers, crypto is like a sea of opportunity. As a result exchanges have to take security very seriously to protect both themselves and their users from attacks.
BitMEX doesn’t mess about in this regard; the platform has implemented advanced security features such as two-factor authentication, cold storage for all customer funds, and an auditing system for all transactions.
The site also features multi-signature wallets to ensure no one staff member has full access to funds and all withdrawals require manual approval by BitMEX staff before being processed. The latter provides an extra layer of protection against malicious actors attempting to access the platform or steal funds from users.
In addition the platform utilizes full SSL encryption, withdrawal confirmation emails and IP address whitelisting.
Additionally, BitMEX has strict anti-money laundering (AML) and know your customer (KYC) procedures in place to further protect its customers. For the users themselves BitMEX's biometric features include facial recognition, fingerprint scanning, voice recognition, and two-factor authentication.
All in all, BitMEX has got its security wrapped up tighter than Fort Knox.
Controversy
Remember when we said we would talk more about its co-founders? This is that bit. Let’s dive in:
Firstly, in July 2019 a staunch critic of cryptocurrency by the name of Nouriel Roubini accused the exchange of being involved in illegal activity, namely allowing traders on its site to take on too much risk as well as actively trading against their clients.
Less than a week later the news was broken by Bloomberg that the Commodity Futures Trading Commision (CTFC) were investigating the platform through allowing US citizens to trade on the platform, even though its not allowed in the country.
Then in early October 2020 co-founders Hayes, Reed and Delo were indicted for violating the U.S. Bank Secrecy Act , due to allegations that they had failed to implement anti-money laundering measures on the platform.
Six months later in April, Hayes surrendered himself for this violation and was released on a $10 million bond pending court proceedings in New York, USA. Ten months after that in February, he and Delo pled guilty to the charges, due to knowingly failing to implement and maintain an anti-money laundering aspect of the site.
The two agreed to pay a $10 million fine for the offense – Hayes was sentenced to two years of probation with home confinement for six months, and Delo was sentenced to 30 months probation and as a UK citizen was sent to Hong Kong to serve probation.
Reed also paid $10 million for violating the same act in March, but things are a bit more severe, as he has an ongoing trial, which when sentenced could mean he faces up to five years in jail.
Not a good look BitMEX.
Proof of Reserves
 | $1,811,876 | |||
| $1,793,498 | |||
| $1,785,406 | |||
| $1,716,743 | |||
| $995,698 | |||
| $963,228 | |||
| $917,384 | |||
| $871,958 | |||
| $871,233 | |||
| $709,425 | |||
| $684,406 | |||
| $1,430.00 | |||
| $472.00 | |||
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| $439,598,903 | |||
 | $81,450,351 | |||
| $52,288,849 | |||
| $7,049,715 | |||
| $1,973,280 | |||
| $1,888,425 | |||
| $1,882,138 | |||
| $1,881,174 | |||
| $1,867,045 | |||
| $1,859,678 | |||
| $1,848,717 | |||
| -- | |||
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| $20,595,274 | |||
| $8,989,365 | |||
| $7,747,507 | |||
| $7,407,711 | |||
| $7,148,197 | |||
| $1,712,611 | |||
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| $8,375,155 | |||
| $5,855,817 | |||
| $5,592,180 | |||
| $5,249,795 | |||
| $4,350,526 | |||
| $3,736,928 | |||
| $3,638,024 | |||
| $3,622,698 | |||
| $3,575,334 | |||
| $3,433,494 | |||
| $2,926,834 | |||
| $2,851,790 | |||
| $895,664 | |||
| -- | |||
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| $2,575,121 | |||
| $2,463,560 | |||
| $2,403,450 | |||
| $2,402,945 | |||
| $2,391,481 | |||
| $2,241,488 | |||
| $2,176,500 | |||
| $2,063,534 | |||
| $2,021,729 | |||
| $378.00 | |||
| $335.00 | |||
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| $650,681 | |||
| $643,937 | |||
| $408,192 | |||
| $613.00 | |||
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| $1,811,127 | |||
| $1,808,873 | |||
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| $1,839,096 | |||
| $1,687,115 | |||
| $1,660,291 | |||
| $1,558,909 | |||
| $1,485,116 | |||
| $1,478,649 | |||
| $994,950 | |||
| $991,479 | |||
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| $1,460,402 | |||
| $1,458,786 | |||
| $1,373,400 | |||
| $1,357,799 | |||
| $1,265,309 | |||
| $1,260,751 | |||
| $1,233,657 | |||
| $1,225,819 | |||
| $1,217,166 | |||
| $1,201,718 | |||
| $1,197,656 | |||
| $1,178,777 | |||
| $1,177,956 | |||
| $902,430 | |||
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| $1,142,035 | |||
| $1,111,758 | |||
| $1,097,170 | |||
| $1,085,138 | |||
| $1,077,745 | |||
| $1,052,405 | |||
| $1,030,050 | |||
| $1,022,942 | |||
| $1,017,581 | |||
| $1,016,480 | |||
| $1,008,337 | |||
| $1,007,882 | |||
| $997,575 | |||
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| $2,953,187 | |||
| $954,950 | |||
| $940,576 | |||
| $940,553 | |||
| $931,620 | |||
| $929,105 | |||
| $915,795 | |||
| $910,271 | |||
| $903,677 | |||
| $900,305 | |||
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In the light of the FTX scandal, it's safe to assume that most exchanges are jumping at the chance to prove their legitimacy and be transparent about what they do with user funds.
Fortunately, Bitmex became the first exchange to launch its Proof of Reserves & Liabilities in November of 2022. Ever since, BitMEX updates its Proof of Reserves & Liabilities twice a week and their privacy preserving Proof of Liabilities process allows each and every user to verify their own account balance is included in the liability total.
Conclusion
In conclusion, BitMEX offers a wide range of services and products for traders, from leveraged trading to derivatives.
However, it is not without controversy; its high-risk nature has led to accusations of market manipulation, and this isn’t helped by the scandal surrounding its founders.
Although it remains an attractive option for those looking to engage in digital asset trading at higher volumes or leverage levels than traditional exchanges can offer, its had a little too much scandal to make it one that CoinScan can easily recommend.