CEO Stephan Lutz on BitMEX Resilience During the October Crypto Crash

When crypto markets plunged on Oct. 10–11, 2025, the sell-off triggered one in all the sharpest and quickest liquidations ever recorded in digital asset buying and selling. CoinGlass information recorded greater than $19.16 billion in positions worn out inside 24 hours, with over 1.6 million merchants affected throughout main exchanges.

While a number of giant crypto exchanges noticed multi-billion greenback liquidations, BitMEX stood out. The trade recorded about $32 million in lengthy liquidations and $5.9 million briefly positions. That was lower than 0.2% of the market’s wipeout. Its buying and selling engine held regular beneath file load, processing its highest buying and selling quantity since 2021 whereas sustaining full entry for customers all through the crash.

BeInCrypto just lately sat down with Stephan Lutz, BitMEX CEO, to debate what allowed the trade to remain steady when others faltered, how its design philosophy prioritizes resilience beneath stress, and what classes merchants ought to take from the October crypto crash.

Stability by Design

BitMEX’s resilience throughout the October crash resulted from deliberate engineering for stress circumstances, the place stability issues greater than scale. Lutz defined that BitMEX’s buying and selling engine was particularly designed to stay purposeful throughout sudden market shocks. He famous that the firm had averted a number of frequent design flaws seen elsewhere, notably in how collateral is managed by “aggressive Multi-Asset Margining.”

Lutz defined:

“Many exchanges settle for a various vary of altcoins as collateral for derivatives buying and selling, which creates the excellent situation for retail buyers to hit such a crash. High haircuts on collateral imply early liquidation. Altcoins have much less liquidity, particularly throughout such a situation, which ends up in congestion of the methods.”

“BitMEX solely accepts collateral with comparatively low haircuts, round 5% solely, and which has confirmed liquid in such a situation. This reduces buying and selling alternatives, however ensures that in such a situation, the system works smoother and your liquidation as a dealer comes later.”

Lutz added that collateral on BitMEX have to be held straight on the platform, not in exterior accounts or wrapped devices, guaranteeing it’s instantly out there to fulfill margin calls. This structural choice retains market makers responsive and reduces the type of panic-driven suggestions loops which have destabilized different venues.

The similar rigor applies to BitMEX’s Insurance Fund. During the crash, the fund absorbed about $2 million in losses whereas sustaining full solvency. As the firm famous in its report, the fund “is rarely staked, lent, or rehypothecated.” Lutz described it as a rules-based mechanism that capabilities robotically, eradicating human discretion and defending person funds even during times of market stress.

“If the insurance coverage fund is only a dedicated quantity however isn’t automated or used for producing yield or supporting buying and selling, you’ll need to get everybody on-line first earlier than it operates,” he advised BeInCrypto.

Lutz acknowledged that such self-discipline comes with trade-offs. The method might cap short-term exercise.

“In a low volatility surroundings, it limits buying and selling quantity creation. But in such unstable environments, our design is helpful for our merchants and ensures their safety.”

How BitMEX’s Design Contained the Market Crash

Price feeds turned the Achilles’ heel of the October crash. When inner oracles malfunctioned, a number of exchanges confronted liquidation cascades primarily based on distorted information. BitMEX averted that end result by its Fair Price Marking mannequin.

“BitMEX doesn’t use its personal last-traded value for liquidations. It makes use of a composite index for Fair Price Marking, derived from a weighted common throughout 16 main liquid spot exchanges – all our opponents included. This methodology prevents localized liquidity crises or flash crashes on a single constituent trade from triggering unjust liquidations,” Lutz elaborated.

Lutz emphasised that this construction additionally makes manipulation considerably more durable. Because BitMEX attracts costs from a number of sources, no single actor can distort its markets by skinny order books or native anomalies.

In its official report, the firm described this setup as “immunity from localized de-pegging,” which successfully insulated customers from the pricing chaos that swept by opponents.

Another layer of safety got here from the Auto-Deleveraging (ADL) mechanism, which the firm calls its “final safeguard.” 

While many exchanges noticed their insurance coverage funds drained or halted withdrawals, BitMEX’s threat engine intervened solely 15 occasions, a fraction of its complete open contracts. Lutz stated ADL activation was “deliberate and surgical,” designed to guard the fund from collapse. 

“The ADL was invoked for low liquidity contracts and for unusual buying and selling habits solely. We monitor buying and selling volumes and habits and intention to guard reputable positions, largely which have been entered and added to open curiosity earlier than such a sudden occasion.”

According to BitMEX’s post-event information, this rules-based method stored its Insurance Fund absolutely operational and decreased pointless losses for customers already beneath stress.

Even with these automated methods, human verification remained an integral part. Lutz famous that in the most unstable interval, the workforce stepped in solely to validate information integrity.

“We skilled some mark and index costs being quickly ‘caught’ — an intentional security function that caps most value strikes to catch information errors or anomalous wicks. Our workforce was solely current to confirm these strikes and forestall any automated chaos that might be attributable to flawed oracles from different exchanges.”

Combining algorithmic precision with human verification, this hybrid mannequin mirrored the philosophy underpinning BitMEX’s complete structure. The methods executed precisely as designed, whereas individuals ensured the information driving them remained dependable. Together, they stored the trade steady throughout such stress.

After the Crash: Regulation, Responsibility, and Resilience

In the weeks after the October crypto crash, questions of accountability dominated trade conversations. Some observers known as for tighter regulation to forestall related occasions, however Lutz rejected the concept that new guidelines might have stopped the market’s collapse.

“I feel the name for regulatory intervention is unsuitable. We want to speak about what occurred. The crash wasn’t attributable to simply defective methods, however somewhat the reverse. There was some unusual habits of people concerned, then high-risk taking in the broader market, after which the methods labored as designed.”

According to him, the occasion demonstrated that crypto’s transparency already offers the only type of market safety. He identified that transactions and value information could be monitored in actual time by anybody with entry to a blockchain explorer, which makes crypto inherently extra observable than conventional finance. In his view, the sector wants higher enforcement of present requirements somewhat than new regulatory layers.

Lutz additionally in contrast digital asset markets’ response to conventional monetary methods, arguing that regardless of heavy regulation, conventional markets nonetheless expertise fraud and structural breakdowns. He believed that crypto, against this, dealt with the disaster extra effectively as a result of losses have been absorbed by those that selected to take dangers. He acknowledged that schooling might enhance person outcomes however reiterated that no regulation can or ought to eradicate the risk of loss.

For retail merchants, the takeaway was simple. Many have been caught off guard as a result of they took on high leverage or traded on platforms that would not stand up to the stress. Lutz emphasised that merchants must prioritize exchanges with clear, rule-based operations and perceive how these methods operate earlier than committing capital.

He suggested:

“Crypto’s official motto is DYOR (do your personal analysis), which means you could know what you’re getting your self into. If you consider you may comply with and outsmart some massive gamers on a DeFi venue, then you ought to be allowed to take action. But if you recognize you can not, it’s best to have a look at issues like transparency, consistency, which is much more vital than transparency, the availability of documentation, whether or not the platform works rule-based or discretionary, whether or not your funds can be found or used to generate additional yields.”

At the institutional degree, he seen the October crash as a validation of BitMEX’s working philosophy.

“No change from our facet. What we hope it reinforces is that market contributors and institutional gamers specifically search for content material somewhat than rubber-stamping,” he concluded.

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