Did BitMex Maintenance and Manipulation Actually Cause a Bitcoin Pump?

At the time of the pump, the premium for Bitfinex Bitcoin rose by almost $150, meaning the market order pushed up the price on Bitfinex first, and the Bitcoin price on Coinbase followed.

Most shorts opened are now underwater, and many people that were shorting the market on BitMEX also set market stop-losses to protect themselves in case of a pump.

Due to a rapid rise in price, people shorting the market are automatically forced to close out all of their positions, and the market buys Bitcoin to cover their short positions.

If you push the price of Bitcoin from $6,500 to $6,700, shorts with an entry point of $6,600 will be forced to close their positions, which means the market buying Bitcoin.

It's clear from the chart that the majority of shorts opened were already underwater, and that a few hundred dollars of price action would drive massive amounts of liquidations and push the price upward.

The EffectsWhen BitMEX came back online, many people who had short positions were immediately liquidated at sky-high prices due to huge price movement during the pump.

In the minutes after re-opening, BitMEX saw Bitcoin prices briefly hit $7,100, just seconds after trading at $6,450.

Even if there wasn't, it is illegal to artificially inflate the price of an asset to cause liquidations or entice other traders to enter the market.

Even if no manipulation was involved, it highlights a huge issue in the markets; the importance of Bitmex, a fully unregulated market with 40 percent market share.

Tuesday's market movement throws a wrench in the plans of any ETF approval, as the SEC has made it clear their biggest concern with an ETF is market manipulation.