BitMex Offers Bitcoin Cash Futures, Massive Sell-Off to Follow?

Bitcoin Mercantile Exchange or BitMEX has just announced that they will be offering a new futures product based on the oft-maligned Bitcoin Cash. Beginning now and with an expiry date of the 24th of November, the futures contract will allow for up to 20 times leverage, at a value of one Bitcoin Cash per share. Using the symbol BCHX17, the investment products comes as a big surprise to anyone who is aware of BitMEX and their stance on Bitcoin Cash.

BitMEX Vs. Bitcoin Cash

In a post back in July of this year, BitMEX made a clear statement that they will not be supporting Bitcoin Cash. Specifically, they felt that the hard forked currency was done in a dangerous and unreliable way. According to their statement, Bitcoin Cash was not sufficiently tested, did not provide enough lead time for developers to run tests, and lacked replay protection.

In the statement released in regards to the new futures announcement, BitMEX included the following:

BitMEX does not agree with contentious hard forks, and does not accept the manner in which Bitcoin Cash was forked, or the lack of preparation or notice before the fork; we consider this a dangerous action that imposes unacceptable costs on end-users and businesses.

As a result, BitMEX made a formal decision to not support Bitcoin Cash. That begs the question, what is going on with the new futures contract? Why are they suddenly offering an investment product denominated in a currency they do not support?

BitMEX and the big Bitcoin Cash dump

On the original futures announcement notice, the post ended with the following line:

However, months after the fork, it is clear this coin still has value and popular demand, so we have decided to credit Bitcoin at the prevailing Bitcoin Cash price.

What this means is that instead of users who were entitled to Bitcoin Cash from the fork receiving BCH, they will instead be given Bitcoin. The exchange rate will be determined at the time BitMEX sells off all of their BCH holdings. This sell-off could happen at any time before December 31st. While we don't know exactly how much Bitcoin Cash BitMEX is holding and planning to sell, it's safe to say that the fallout of a massive sell-off could be enormous.

Since the announcement, Bitcoin Cash values have falling, likely due to fears of the upcoming sell-off. According to recent data, BCH prices have dropped close to 20% following the announcement. The actual sell-off itself may not occur until the end of 2017. Therefore it's possible that fears of the currency dumping may depress prices for the next few weeks or months. Price will likely stabilize after the sell-off occurs.

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