Thursday was among the most bearish crypto trading days in history, and the day ended with Bitcoin (BTC) cratering to $3,850 before suddenly recovering to over $5,000. Notably, BitMEX went down right before Bitcoin (BTC) began to recover, and some expert traders are saying this is not a coincidence.

BitMEX claims that the market went down on Thursday night due to a hardware issue, and since BitMEX shows some evidence for this issue, it cannot be definitively refuted.

However, another theory is that BitMEX was locked into a cascading margin call where accounts were being liquidated one after another, leading to a continuous and accelerating Bitcoin (BTC) price crash. This not only caused the BitMEX order book to almost entirely evaporate but also threatened the entire crypto space.

Crypto trading expert Lowstrife theorizes that BitMEX shut down the market to end this chain reaction, and indeed, Bitcoin (BTC) instantly reversed its crash and rallied over $1,000 during the hour BitMEX was down. 

Lowstrife goes on to theorize that BitMEX then used this situation to profit, but this cannot be confirmed.

Regardless, a liquidation chain reaction was occurring on BitMEX, and this chain reaction was causing the global spot price of Bitcoin (BTC) to crash. Whether it was a hardware issue or on purpose, the effect is the same, BitMEX turning off for an hour prevented Bitcoin (BTC) from cratering even further.

This incident shows that liquidation chain reactions on BitMEX can have a major negative impact on global crypto markets.