BitMEX, a prominent cryptocurrency derivatives exchange, has ventured into the world of prediction markets, introducing a novel feature that allows traders to place bets on real-world events. This new offering, aptly named “Prediction Markets,” presents BitMEX users with an intriguing opportunity to engage in speculative trading across various topics and industries, potentially capitalizing on their predictions.
Initial BitMEX Prediction Market Contracts
As of September 13, BitMEX has unveiled three initial prediction market contracts. The first, denoted as “P_FTXZ26,” enables traders to forecast the recovery rate of customer claims in the event of FTX’s bankruptcy. This contract expires on December 25, 2026, at 20:00 UTC.
Meanwhile, the “P_XBTETFV23” contract allows participants to wager on whether the U.S. Securities and Exchange Commission (SEC) will approve a Bitcoin Exchange-Traded Fund (ETF) before October 17, 2023, with an expiry date of October 27, 2023, at 20:00 UTC.
Lastly, the “P_SBFJAILZ26” contract permits users to speculate on the possibility of Sam Bankman-Fried, the founder of FTX, receiving a jail sentence. This contract is scheduled to conclude on December 25, 2026, at 20:00 UTC.
These prediction markets on BitMEX come with some distinctive features compared to traditional futures contracts. Notably, contracts are priced using the “Last Price” method, leverage is not offered, margin and settlement are conducted in Tether (USDT), and payouts are based on a bounded price range from 0 to 100.
Additionally, maker fees are set at 0.00%, while taker fees are 0.25%. Early settlement is possible if the outcome or event is resolved before the contract’s predetermined expiry.
BitMEX has stated that certain jurisdictions may not have access to this product suite. To provide an illustration of how BitMEX Predictions function, consider a fictional scenario where a trader enters the market by predicting the recovery rate for FTX’s customer claims using the “P_FTXZ26” contract.
They anticipate it will be $0.60 per $1 and proceed to purchase 1,000 contracts at a price of 20. They hold onto these contracts until the contract’s expiry date.
In this fictional case, the contract’s settlement price reaches 30 at expiry, which is 50% higher than their entry price. Consequently, the trader’s payout is $100 USDT, calculated as (Exit Price – Entry Price) * Multiplier * Number of contracts.
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