how bitmex bought bitcoin

BitMEX's early adoption, strategic partnerships, OTC trading, crypto mining, market making, user acquisitions, and margin trading strategies facilitated its acquisition of Bitcoin in the early years of the cryptocurrency.

Nov 03, 2024 at 01:38 pm

How BitMEX Acquired Bitcoin

1. Early Adoption

BitMEX, founded in 2014, was among the first cryptocurrency exchanges to offer trading in Bitcoin.

It played a significant role in the early adoption of Bitcoin by providing a regulated platform for investors.

2. Strategic Partnerships

BitMEX formed partnerships with key players in the Bitcoin ecosystem, such as blockchain explorers and liquidity providers.

These partnerships allowed BitMEX to source Bitcoin at competitive prices.

3. OTC Trading

BitMEX established relationships with market makers and institutions to engage in over-the-counter (OTC) trading.

OTC trading enabled BitMEX to acquire large amounts of Bitcoin without impacting the market price.

4. Crypto Mining

BitMEX invested in Bitcoin mining operations to generate its own cryptocurrency.

Mining rewarded BitMEX with newly created Bitcoins, which it added to its inventory.

5. Market Making

BitMEX acted as a market maker in the Bitcoin market, providing liquidity and facilitating trades.

As a market maker, BitMEX could acquire Bitcoin through its trading activities.

6. User Acquisitions

BitMEX attracted a large user base through its innovative trading platform and high yields on Bitcoin derivatives.

Users deposited their Bitcoins on BitMEX, which increased the exchange's liquidity and access to the cryptocurrency.

7. Margin Trading

BitMEX offered margin trading, allowing users to borrow funds from the exchange to increase their buying power.

Margin trading facilitated the purchase of Bitcoin even when market prices were high.

Conclusion:

BitMEX acquired Bitcoin through a combination of strategic partnerships, OTC trading, crypto mining, market making, user acquisitions, and margin trading. These strategies allowed the exchange to establish itself as a major player in the Bitcoin market.