Prediction Markets – a unique breed of crypto derivatives – has arrived at BitMEX. An addition that allows our traders to predict and take positions on the outcomes of real-life events, across a diverse range of topics, industries and more.
From the possible recovery values of bankrupt crypto projects, to the future of their founders – if it’s topical, borders on “juicy” – Prediction Markets will offer BitMEX users an alternative set of products for opportunities to profit.
TL;DR? The first batch of contracts currently available to trade include predictions on; FTX bankruptcy claims, the future of Bitcoin ETFs, as well as the fate of Sam Bankman-Fried.
For a deep dive on this new offering and to understand how BitMEX Predictions work, read on.
If you haven’t signed up for a BitMEX account yet, we’re currently offering $5,000 worth of BMEX Tokens to new users – you can register here.
An Explanation of Prediction Markets, Our New Crypto Derivative
Prediction Markets are a new gateway for traders to earn returns through predicting the outcomes of events across topics from crypto, to traditional finance, and everything in between. As well as serve as an avenue to hedge risk on future outcomes.
Not only does this provide users new trading and hedging opportunities, it also unlocks a lower-risk, safer market for bounded outcomes.
As of 13 September, there are three Prediction Markets contracts available to trade:
- P_FTXZ26: A prediction on the recovery rate of FTX’s customer claims.
- Settlement: The contract will settle on the recovery rate of FTX’s customer claims (full terms are here).
- Expiry: 25 December 2026 at 20:00 UTC.
- P_XBTETFV23: A prediction on the SEC’s approval (or not) of a Bitcoin ETF.
- Settlement: The contract will settle at 100% where a Bitcoin ETF is approved by the US SEC on or before 17 October 2023 (full terms are here).
- Expiry: 27 October 2023 at 20:00 UTC.
- P_SBFJAILZ26: A prediction on whether SBF is sentenced to jail.
- Settlement: The contract will settle at 100% should the trial of Sam Bankman-Fried in the United States District Court, Southern District of New York result in a custodial sentence (full terms are here).
- Expiry: 25 December 2026 at 20:00 UTC.
How Do Prediction Markets Work at BitMEX?
Prediction Markets work the same as all futures contracts on BitMEX, with a few differences as listed below:
- The price of the contracts will be marked as Last Price*.
- No leverage is granted.
- Margin and settlement in Tether (USDT).
- Payouts will be based on a bounded price from 0 to 100.
- Maker fees are set at 0.00% and Taker fees are set at 0.25%.
- Early settlement will take place if the outcome or event occurs before the contract expiry date.
- The product suite will not be available to users in particular jurisdictions.
*Last Price is used as an external price index is not required to mark the price of a contract, as long as a price is available to settle.
Each contract has a value between zero and one USD, but is quoted in percentage terms.
Each and every listing under Prediction Markets will be vetted by our team, taking into account the difficulty of defining the particular outcomes. Settlement of the contracts will be in USDT and based on our platform’s best efforts to provide a settlement price – as is the case already with all futures contracts on BitMEX.
As the new listings are speculative contracts that are marked on Last Price, users should adjust their risk tolerance accordingly when trading the products.
Show Me an Example of How BitMEX Predictions Works
To illustrate the details of how predictions work, we’ve included an example scenario below. Needless to say, it’s a fictional one.
Say, the P_FTXZ26 contract is available to trade on our platform, whereby traders can take a position on the amount that ex-FTX users will receive per one USD on the debt recovery date.
A trader wishes to participate in this prediction market. They believe the recovery amount will be 0.60 USD per one USD.
At the time of trading, the P_FTXZ26 contract is priced at 20, meaning the market predicts the recovery amount will be 0.20 USD per one USD. The trader decides to purchase 1000 contracts at this price, all of which expire on 25 December 2026.
Please note that the trader must post 100% margin in USDT, as no leverage is allowed.
Three options are available to the trader after doing so:
- They can sell all 1000 contracts when the P_FTXZ26 contract’s market price is above 20 to realise profit.
- They can wait until the contract’s expiry date, and settle the contract with the announced recovery amount as defined in the contract specifications.
- They can sell all 1000 contracts when the P_FTXZ26FTX contract’s market price is below 20 to realise loss (and free up their margin).
In this particular scenario, the trader decided to move forward with option 2 and holds their position. On the date of expiry, the contract’s settlement price is 30 – which is 50% higher than the trader’s entry price.
This means the trader’s payout will be 100 USDT, which is (Exit Price – Entry Price) * Multiplier * Number of contracts = (30 – 20) * 0.01 * 1000.
The first batch of Prediction Markets contracts began trading on 13 September at 03:00 UTC. You can start trading P_FTXZ26 here, P_XBTETF here, and P_SBFJAILZ26 here.
To be the first to know about our new listings, product launches, giveaways and more, we invite you to join one of our online communities and connect with other traders. For the absolute latest, you can also follow us on Twitter, or read our blog and site announcements.
In the meantime, if you have any questions please contact Support who are available 24/7.