Success,
It’s got enemies. Lots of enemies.
The success took a shot at you.
What you gonna do? Kill it?
You gonna become unsuccessful?

— American Gangster

The Bitcoin phenomenon created a whole new industry of cryptocurrencies and digital tokens. The top dog was and still is Bitcoin. But starting in 2017, challengers began seriously nipping at the heels of the champ.

According to Coinmarketcap, the entire digital currency market cap increased $22.89 billion YTD. Bitcoin’s share decreased from 87.60% to 60.06%; that represents $6.3 billion of funds diverted away from the King of Crypto.

Big Daddy Vitalik must be pleased with himself and his Ether child. Ether’s market cap rose by a factor of 10 in 2017. Its market share jumped from 4% to 18.23%. You can bet the devs will be having fun blowing money on the usual accoutrements of suddenly wealthy men at Devcon 3 in Cancun. PSA: please don’t wear socks and sandals unless you play in the NBA.

ICO mania began this year with Gnosis. The ICO made Gnosis the most valuable crowd-funded project ever at inception. Gnosis, like many other projects, is token built using the Ethereum protocol. Dapps (Decentralised Applications) must spend Ether in order to function. The more successful and useful you believe Dapps will become, the more Ether must be purchased and then spent. That is one major reason why Ether’s value is skyrocketing.

The vast majority of projects that launch ICO’s aren’t worth even one satoshi. The same can be said for the vast majority of startups, or even listed companies. Here’s looking at you Snap.

ICO’s will not go away. For the first time in financial history, founders can access capital from both large and small investors armed with nothing more than a slick website. No regulatory filings or egregious investment banking fees are required to raise capital. The capital of the 99% is there, and they are hungry to participate in the success of the next Google, Facebook, Tencent etc.

The same excitement Ether developers and users exude is not as palpable in the Bitcoin community. The community is no closer to an agreement on the proper way to scale Bitcoin. And banking issues continue to curtail the ability for new money to enter the ecosystem. The rising Bitcoin price papers over the major issues the ecosystem faces.

The Bitcoin to Ether comparison is not apples to oranges. One is digital gold, the other is a decentralised applications protocol.

They both can be wildly successful together. After the DAOsaster, Ether is being treated once more by some as digital money. The utility that Ether provides Dapps could give it the velocity to challenge Bitcoin’s status as the reserve currency of crypto.

That utility could be Ether’s achilles heel. Big Daddy Vitalik and the Ethereum Foundation care not if Ether is used as money good collateral, they care for it to power useful applications. Therefore, they will make decisions regarding the Ethereum protocol that could harm Ether’s moneyness in favour of its utility.

Most Bitcoiners desire Bitcoin to remain the best form of digital money. The varying viewpoints on how to achieve this lofty goal is one reason why development on the protocol has stalled. While this frustrates many, it also means that the community will not approve actions that would damage Bitcoin moneyness.

BitMEX is bullish on the industry as a whole. A rising market cap is good for everyone, even if the previous star shines less bright. In the end, BTFD!

The following will be effective 2 May 2017 12:00 UTC:

• The .GNOXBT Index will use the most liquid GNO/XBT spot exchange’s price. At this moment, it appears that the most liquid exchange will be Poloniex.
• GNOM17 will switch from Last Price to Fair Price Marking. Please read Fair Price Marking for more details on how this will affect trading.
• The Limit Up / Down restrictions will be removed.

Traders,

Due to a quicker than expected price divergence on OKCoin International, we are moving the timetable forward for the removal of OKCoin International and the incorporation of GDAX into the index.

The new timetable is:

• At 21:45 UTC, GDAX will be added to the index. At this time, the index will have three constituents.
• At 22:00 UTC, OKCoin International will be removed.

For more information, please see our previous post on the removal of OKCoin International.

Yesterday, OKCoin International announced USD deposits have been blocked:

Starting from today (April 18th, 2017), OKCoin would temporarily suspend USD deposit because of the issues with intermediary banks. Please do not make further deposit as your wires may be rejected by intermediary banks. We are now actively looking for alternatives to resume deposit as soon as possible. Your current account balance remains unaffected. We are sorry for any inconvenience caused.

For this reason, we are weighting OKCoin Intl to 0 in the .BXBT Index, effective 20 April at 08:00 UTC. To re-distribute the index, GDAX will be reinstated as an equal member.

The new distribution will be equally weighted between GDAX and Bitstamp. For reference, this change is live on Testnet and can be used for intermediate pricing data.

Additionally, we will be announcing new price protection mechanisms for BitMEX indices to prevent further bad pricing issues.

Update: Due to rapid price divergence, the timetable has been moved forward to 19 Apr at 22:00 UTC.

Traders,

During the past weeks, many major exchanges have experienced issues with their banking relationships, and one sent incorrect prices. These prices caused liquidations on multiple platforms, including BitMEX. Affected traders were reimbursed from BitMEX funds.

We intend for the BitMEX index to accurately represent asset prices on functioning, liquid exchanges. Unfortunately, the landscape is shifting quickly. We expect more index changes to come as exchanges lose and regain their banking relationships.

In preparation for this, we are instituting the following protections to all BitMEX calculated indices:

• For an index with 3 or more constituents, if any constituent’s price is X% away from the median price, that constituent will be removed until BitMEX manually reinstates it.
• For an index with 2 constituents, if any constituent’s price is (X% / 2) away from the currently calculated index value, the index value published will be the last calculated index value.
• For an index with only 1 constituent, if the constituent’s price is X% away from the last calculated index value, the index price will remain unchanged.

For Bitcoin / Fiat currency pair based contracts, the tolerance will be 25%. For Altcoin contracts, the tolerance will be 50%. The tolerance is subject to change with notice.

Additionally, the following protection has been in place since launch:

• If any constituent exchange’s API feed is not responsive, the last valid price is used. If an exchange’s feed is stale for over 15 minutes, it is removed until the feed is operational again.

Example 1 (3-Exchange Index):

The index is equally weighted between exchanges A, B, and C. The initial price on exchanges A, B, and C is 100, and the tolerance is 25%. The median index price is 100. The price observed on exchange C changes to 50. Exchange C will be removed, the index price will remain at 100, and the index will now be equally weighted between exchanges A and B.

Example 2 (2-Exchange Index):

Tolerance: 25%

Time 0:

Exchange A Price: 100

Exchange B Price: 100

Published Index Price: 100

Time 1:

Exchange A Price: 100

Exchange B Price: 50

New Calculated Index Price: 75

Last Published Index Price: 100

New Published Index Price: 100

Because the difference between the two exchange prices and the New Calculated Index Price is greater than 12.5% (Tolerance / 2), the Last Published Index Price will be used.

Time 2:

Exchange A Price: 50

Exchange B Price: 50

New Calculated Index Price: 50

Last Published Index Price: 100

New Published Index Price: 50

Because the difference between the two exchange prices and the New Calculated Index Price is less than 12.5%, the New Calculated Index Price will be used.

Example 3 (1-Exchange Index):

The index is made up only of exchange A. The price on exchange A moved from 100 to 50. Given that the tolerance is 25%, and exchange A’s price moved 50% (50 vs. 100), the index value remains at 100. If exchange A’s price changes to 51, the index value will still remain at 100. If exchange A’s price were to change to 80, the index value would become 80.

Example 4 (Downtime):

The index is equally weighted between exchanges A, B, C, and D. The API feed for Exchange D has been down for 15 minutes. Exchange D will be removed, and the index will now be equally weighted between A, B, and C. 5 minutes later, D begins responding and is reinstated.

Just recently, Bitfinex announced that USD deposits will be rejected until further notice. In combination with their previous notice blocking USD withdrawals, this means that Bitfinex is no longer a viable USD/Bitcoin exchange, and we expect the pricing discrepancy between Bitfinex and other exchanges to increase as traders attempt to withdraw via cryptocurrencies.

For this reason, we are weighting Bitfinex to 0 in the .BXBT Index, effective at 16:00 UTC today (30 minutes from the time of this post). In combination with the prior temporary suspension of GDAX from the index due to pricing discrepancies, this means that for the time being, the old .XBT index and the new .BXBT index will print the same prices.

At 23:02 UTC on 15 April 2017, one constituent of our .BXBT Index, GDAX, reported a trade print of $0.06 / XBT. This fed into the .BXBT Index and caused the price to temporarily move down to $888.48 / XBT which led to a number of users having their positions liquidated.

This was not a BitMEX engine or pricing issue. However, we strive to create a fair platform where users are not unfairly disadvantaged due to an error on another exchange, even if this error was an official price. As such, BitMEX will be refunding those users who were unfairly liquidated due to the pricing discrepancy from GDAX out of our own company funds.

Those users who had their positions liquidated will see the loss between $1183.00 / XBT and their liquidation price transferred back to their BitMEX Bitcoin wallet. Positions lost due to liquidation will not be reinstated.

For the time being, GDAX will be weighted at 0 in the .BXBT index until we have built in sufficient outlier protections.

On 24 March 2017 at 12:00 UTC, BitMEX will delist the following Altcoin weekly futures contracts: ETH7D, XMR7D and DASH7D. As their replacement, BitMEX will trial the following monthly futures contracts:

• ETHJ17
• XMRJ17
• DASHJ17

These above contracts will settle on 28 April 2017 at 12:00 UTC on their respective 30 minute TWAP. All other specifications on the contracts remain the same.

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