Crypto derivatives exchange BitMEX to rejig weights of its indices; Huobi gets a significant weight

Quick Take

  • Crypto derivatives exchange BitMEX is making changes to weights of its indices later this month 
  • Huobi exchange, which currently does not have any weight in BitMEX’s indices, is going to get a significant weight
  • BitMEX said the updated indices “will reflect higher weights for exchanges with higher volumes”
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Cryptocurrency derivatives exchange BitMEX is updating weights of its indices on Nov. 22 to ensure the reference prices more closely reflect the market consensus.

Announcing the news on Friday, BitMEX said the update will allow users to trade contracts on indices that are even more optimized for fairness, robustness and accuracy.

The biggest change appears to be including cryptocurrency exchange Huobi with a significant weight for most of its indices. BitMEX indices are composite, meaning they are calculated using data from several exchanges.

Currently, it uses data from 6 exchanges - Binance, Bitstamp, Bittrex, Coinbase, Kraken and Poloniex. On Nov. 22, it will add three more exchanges - Huobi, Gemini and Itbit, making a total of 9 exchanges.

“Updated indices will reflect higher weights for exchanges with higher volumes. This approach will ensure that BitMEX index prices are more representative of the trade price per trade than per exchange,” said BitMEX.

Notably, BitMEX currently does not include Huobi for its indices weights, and on Nov. 22 it will get weight for 7 out of BitMEX's 9 indices.  Gemini and Itbit, on the other hand, have also been added with minor weights for two of its indices - .BXBT (Minutely Bitcoin Price Index) and .BETH (Minutely Ether Price Index).

BitMEX’s .BXBT index is the most important index, as it is used for the exchange's bitcoin perpetual swap contract. Huobi is notably not included in this index. Currently, Bitstamp, Coinbase and Kraken, each have a 33.33% weight in the index. From Nov. 22, Gemini and itBit will also get weight in the index at 6.19% and 4.20%, respectively. Accordingly, the weights of Bitstamp, Coinbase and Kraken will get changed to 26.81%, 44.44% and 18.36%, respectively.

The current weights
Source: BitMEX

The updated weights from Nov. 22

Source: BitMEX

The BitMEX “NEXT” indices are a new family of indices. The purpose of these indices is to "display, in advance, the hypothetical prices of BitMEX indices which include any new weights, allowing our traders to experience and better understand the potential impact of forthcoming index changes,” said the exchange.

Now on, BitMEX will update its indices immediately after each quarterly futures expiry, with updates based on three months of constituent exchange volume data, per the announcement.

BitMEX's rejig news comes a day after its rival Deribit suffered a malfunction at 21:00 UTC of its flagship bitcoin perpetual swap contract, causing the price of the contract to drop 15%. Around the same time, Coinbase Pro was down for approximately 75 minutes as well from 20:00 UTC to 21:15 UTC, with some citing the downtime as the reason for Deribit's contract malfunction. Coinbase is one of seven exchanges used by Deribit to calculate its bitcoin price index, which many of its trading products rely on.


© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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