BitMEX, a cryptocurrency exchange known for its derivatives trading, has ventured into the world of prediction markets. This new feature allows traders to wager on the outcomes of real-world events, opening up a whole new realm of possibilities for crypto enthusiasts and investors alike.
A Unique Offering: BitMEX Prediction Markets
BitMEX’s foray into Prediction Markets marks a significant addition to its product lineup. Traders can now speculate on the outcomes of a wide array of real-life events spanning various industries and topics. From the recovery rates of bankrupt cryptocurrency projects to the fates of their founders, BitMEX Prediction Markets offer users a fresh and intriguing set of products to explore for potential profits.
As of September 13, BitMEX has launched three prediction contracts:
- P_FTXZ26: A prediction on the recovery rate of customer claims from FTX, a prominent cryptocurrency exchange.
- Settlement Date: December 25, 2026, at 20:00 UTC.
- Contract will settle based on the recovery rate of FTX’s customer claims.
- P_XBTETFV23: A prediction on whether the U.S. Securities and Exchange Commission (SEC) will approve a Bitcoin Exchange-Traded Fund (ETF) by October 17, 2023.
- Settlement Date: October 27, 2023, at 20:00 UTC.
- Contract will settle at 100% if a Bitcoin ETF is approved by the SEC by the specified date.
- P_SBFJAILZ26: A prediction on whether Sam Bankman-Fried (SBF), the CEO of FTX, will be sentenced to jail in the United States District Court, Southern District of New York.
- Settlement Date: December 25, 2026, at 20:00 UTC.
- Contract will settle at 100% if SBF is sentenced to jail.
How BitMEX Prediction Markets Work
BitMEX’s Prediction Markets function similarly to other futures contracts on the platform, with some key differences:
- Contract prices are marked as “Last Price.”
- No leverage is provided.
- Margin and settlement occur in Tether (USDT).
- Payouts range from 0 to 100, representing the likelihood of an event occurring.
- Maker fees are 0.00%, while Taker fees are 0.25%.
- Early settlement is possible if the event happens before the contract’s expiry.
- Availability may vary by jurisdiction.
Each contract is valued between $0 and $1 USD but is quoted in percentage terms. BitMEX’s team carefully vets each listing, considering the challenges of defining specific outcomes. Settlement for all contracts will be in USDT, and the platform will make its best efforts to provide a fair settlement price.
An Example of BitMEX Predictions in Action
To illustrate how BitMEX Predictions work, let’s consider a fictional scenario:
Suppose a trader wants to participate in the P_FTXZ26 contract, predicting the recovery amount for FTX’s customer claims. The trader believes it will be $0.60 per USD.
At the time of trading, the contract’s price is $0.20, indicating the market predicts a recovery of $0.20 per USD. The trader purchases 1000 contracts at this price, all expiring on December 25, 2026. It’s important to note that the trader must post 100% margin in USDT, as leverage is not available.
Afterward, the trader has three options:
- Sell all 1000 contracts when the market price is above $0.20 to realize a profit.
- Wait until the contract’s expiry date and settle based on the announced recovery amount.
- Sell all 1000 contracts when the market price is below $0.20 to limit losses.
In this scenario, let’s say the contract’s settlement price is $0.30 at expiry, 50% higher than the trader’s entry price. The trader’s payout would be $100 USDT, calculated as (Exit Price – Entry Price) * Multiplier * Number of contracts = ($0.30 – $0.20) * 0.01 * 1000.
The first batch of BitMEX Prediction Markets contracts became available on September 13, 2023, at 03:00 UTC, providing traders with exciting new opportunities to engage with real-world events.
BitMEX’s Shift Towards Prediction Markets
BitMEX’s entry into Prediction Markets is a noteworthy development, particularly as it signifies a greater focus on historical events. The platform now offers predictions on topics such as the recovery rate of FTX assets, the possibility of Sam Bankman-Fried facing imprisonment, and the chance of the SEC approving a Bitcoin spot ETF before October 17, 2023.
Stephan Lutz, CEO of BitMEX, commented on this development, emphasizing its relevance in a low-volatility market:
“In a bearish market with low volatility, prediction markets are an excellent tool to elevate your game. This product helps traders diversify their investment portfolios and generate additional income from real-world events.”
BitMEX has come a long way since facing legal challenges from the U.S. Commodity Futures Trading Commission (CFTC) in late 2020. After settling for a $100 million fine and resuming operations, the platform is actively launching new products to entice users back into the fold.
In conclusion, BitMEX’s entry into Prediction Markets is a bold step that demonstrates its commitment to innovation and diversification. Traders now have the opportunity to leverage their insights and knowledge to predict real-world events and potentially profit from their predictions in a secure and regulated environment. As the world of cryptocurrency continues to evolve, BitMEX remains at the forefront of change, offering exciting opportunities for its user base.
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