The March 13 crypto market meltdown ravaged cryptocurrency companies across the industry, sparking a MakerDAO debt crisis and causing millions to be deployed from the insurance funds of exchanges Binance and Deribit.
In spite of the widespread carnage, the insurance fund of leading derivatives exchange, BitMex, only took two days to break back into new all-time highs.
BitMex insurance fund posts new all-time high
Despite going offline for 45 minutes due to a “hardware issue” late March 13, BitMex appears to have emerged from the recent cryptocurrency market massacre stronger than ever.
The crash saw BitMex only deployed 1,627 to deleverage positions during the downturn, slimming the exchange’s insurance fund from roughly 35,500 Bitcoins (BTC) on March 11 to 33,880 approximately 24 hours later.
On March 13, BitMex’s insurance fund posted a record high of nearly 36,500 BTC, indicating that no meaningful damage had been sustained by the exchange during the crypto collapse.
The exchange’s insurance fund has since returned to its pre-crash levels, with the fund holding approximately 35,210 BTC as if this writing — equating to roughly 0.17% of Bitcoin’s total supply, and more than 0.19% of the current BTC supply.
BitMex’s insurance fund builds up as liquidations are “executed at a price better than the bankruptcy price” of positions facing margin calls.
Deribit makes emergency injection of 500 BTC to insurance fund
Unlike BitMex, Deribit’s insurance fund was nearly vaporized overnight as a result of the crash.
In three days, Deribit’s fund fell by 53% from 391 BTC to 183 BTC. This prompted the exchange to prop up the fund by injecting 500 BTC from the company’s personal coffers. On March 13, the exchange tweeted:
“Due to extreme volatility, we've seen a significant impact on our BTC insurance fund. In order to prevent socialized losses, we have decided to support the insurance fund and strengthen it by injecting 500 BTC of company funds.”
Binance has also taken steps to pump up its insurance — which fell 51% percent from $12.8 million USDT to 8.2 million in one day.
Since then, Binance has pumped 4.2 million USDT into its fund — which currently holds nearly $10.5 million USDT.