Starting to increase at the beginning of 2019, BitMEX insurance fund is now holdin 0.15 percent or $312 million worth of BTC currently in existence. This massive cryptocurrency leverage trading leverage trading platform serves as a facilitator for derivatives contracts between multiple parties according to an article on Bitcoinmagazine.com attributed to Landon Manning. Using BigMEX traders are able to conduct transactions much larger than their deposits because of increased leverage.
Traditional asset leverage platforms like the Chicago Mercantile Exchange or the CME have several layers of protection that and the threat of lawsuits and the ability of governments to bail out trading houses is a major source of support if the trading house is on the verge of collapse. Crypto markets being made up of smaller entities, these safety nets do not exist.
With available data going back as far as early 2016, BitMEX claims that this fund “grows from liquidations that were able to be executed in the market at prices better than the bankruptcy price of the particular position” and are withdrawn from whenever customers are unable to fully meet the demands of the transaction. The key to BitMEX is the rate at which this entity is growing, and it suggests that its volume is now at $1 trillion per year. This means that the hold in its insurance fund is actually very small when we consider the volume and potential price fluctuations.