A World Of Hurt

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By Nayantara Bhat | Seychelles-based cryptocurrency derivatives trading platform BitMEX made headlines in June for recording over 1 million Bitcoins traded in the space of 24 hours. Now, trading volumes on the platform are regularly crossing US$4 billion per day.

CEO Arthur Hayes runs the company alongside CTO Samuel Reed and CSO Ben Delo. The three Co-founders set up Bitcoin Mercantile Exchange – or BitMEX for short – in 2014 and they aim to make it the largest exchange in the world by trading volume.

BitMEX differentiates itself from competitors by trading exclusively in financial contracts (as opposed to trading coins) and only handling Bitcoin.

Hayes’ predictions for the Bitcoin price have been widely quoted: he foresees a further fall in price before a sustained rise, which may continue to the point where one Bitcoin could cost US$50,000. “I think this rally is a dead cat bounce,” Hayes says. “I am not convinced traders have experienced enough pain until we test US$5,000.”

Since BitMEX doesn’t allow the participation of US-based individuals, it’s likely that much of the staggering trade volume on the platform was driven by Asian investors.

“In many Asian countries, retail investors have very limited choices for where to invest their money,” Hayes says, listing expensive property and domestic equity as examples. “The advent of 24/7 trading, and the ability to trade using small amounts of capital appeals to the Asian retail investor.”

Interestingly, BitMEX has not held an ICO. Hayes takes ICOs with a healthy dose of skepticism, and argues that they are essentially a new form of private placement – a setting-aside of shares for private investors – which poses some risks when it comes to exiting.

“The VCs structuring these deals are in for a world of hurt, as they will be unable to find a greater fool to unload their bags onto,” he says, adding that ICOs participants are the same group of High Net Worth Individuals and hedge funds, which could result in markets crashing if investors rush to exit all at once. His advice to Founders planning to hold an ICO is – do it fast.

“It is very rare that you can raise enormous sums of non-dilutive capital with such flimsy fundamentals,” he says. “Don’t miss your chance.” bitmex.com

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About Arthur Hayes After obtaining his BA in Economics from the Wharton School of Business at the University of Pennsylvania in 2008, Arthur Hayes moved to Hong Kong where he worked as an equity derivatives trader for Deutsche Bank and Citigroup for 5 years. Arthur was the head ETF market maker at both firms. Formed in January 2014, BitMEX is a P2P crypto-coin trading platform that gives retail investors access to the global financial markets using crypto-coin products.

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