BitMEX and Bitmart have successively shut down; does the closure of exchanges indicate that the bear market has bottomed out?

Author: Wenser, Odaily Planet Daily

The wave of bankruptcies in the bear market continues to spread, with two major cryptocurrency exchanges announcing their shutdowns in just one week.

On the morning of July 26, the second-tier crypto platform BitMart officially announced that after a prudent assessment of the company's operational status, market environment, and future strategic direction, it has decided to orderly cease operations of its trading platform: all trading services will stop on August 26; the platform will cease operations on January 31, 2027.

On July 23, the pioneer of crypto perpetual contracts, BitMEX, announced that it would stop new user registrations immediately and will officially close on September 23, 2026. Many crypto OGs, including CZ, expressed their regret and reluctance. Earlier in July, AscendEX (formerly BitMax) also announced its cessation of operations, citing MiCA regulation, market factors, and financial operational pressure.

Since the crypto market entered a bear phase on October 11 last year, dozens of crypto projects have announced shutdowns, covering DeFi platforms, crypto wallets, on-chain DEXs, crypto research institutions, and more. In the past few cycles, exchanges with sustainable cash flow have shut down one after another, seen as one of the signals of the bear market hitting bottom. Now, a similar scene is unfolding again, seemingly indicating that a turning point may have arrived.

2 Exchanges Announce Shutdown in 3 Days: On-Site Liquidity Tightens, "No One is Trading" Becomes Reality

On the afternoon of July 23, BitMEX officially announced that it would officially close at 12:00 PM (Beijing time) on September 23, and new user registrations would stop immediately. The official statement indicated that this decision was made by the board of directors of the parent company HDR Global Trading Limited after a strategic review.

Three days later, BitMart issued a statement: "After a prudent assessment of the company's operational status, market environment, and future strategic direction, we have decided to orderly cease operations of the trading platform. New registrations, deposits, and new trading orders will be suspended starting at 01:30 UTC on July 26, 2026; all trading services will cease at 01:00 UTC on August 26, 2026; platform operations will officially terminate at 15:59 UTC on January 31, 2027. Withdrawal services will remain open."

If they were not truly unable to sustain operations, these exchanges, which are inherently "cash cows with continuous cash flow," would not face such an outcome. However, the reasons behind this have sparked much discussion in the market, with no definitive conclusions.

CZ: The "War on Crypto" during the Biden Administration is the Main Reason for BitMEX's Downfall

After the news of BitMEX's closure spread, Binance founder CZ expressed regret and reflected, "BitMEX was the first to launch 100x leveraged perpetual contracts in the crypto market in 2014, driving industry development. At that time, BitMEX only supported BTC deposits, operated on a single chain, and used a daily, multi-signature wallet to process withdrawals, which, despite seeming inconvenient, helped the platform avoid hacker attacks in the long term."

He also mentioned that the four co-founders of BitMEX admitted to violating the Bank Secrecy Act (BSA) a month before the court hearing, each fined $10 million and placed under house arrest, but no one went to prison. However, he believes that BitMEX's business ultimately could not withstand the "War on Crypto" during the Biden administration.

It is evident that CZ still has strong opinions about the high-pressure regulatory policies imposed on the crypto industry during the Biden administration, considering it the "last straw" that crushed BitMEX—high-pressure regulation made it impossible for BitMEX to expand its business and sustain operations.

Flashbots Strategic Director: The BitMEX Insurance Fund Mechanism May Be the Main Reason for the Platform's Closure

Flashbots Strategic Director Hasu stated that the structural issues of the BitMEX insurance fund may be a significant reason for the company's choice to close rather than sell.

As early as 2018, he pointed out that the BitMEX insurance fund did not use isolated account management and lacked a clear upper limit on fund size and the final handling of excess assets, which could create incentives for more aggressive liquidation of users, expanding the insurance fund through liquidation, and ultimately monetizing those assets. According to Hasu's estimates, the current size of the insurance fund may be around $270 million.

Hasu's perspective is more focused, believing that BitMEX's downfall was due to an imbalance in the internal fund management mechanism leading to aggressive liquidation rules, which harmed its user base and operational strategy.

As for BitMart's shutdown, it seems somewhat sudden, leading to more diverse discussions in the market regarding the possibilities.

The Mystery of BitMart's Shutdown: Platform Funds Exploded or Internal Management Issues?

As a well-established exchange operating for 8 years, BitMart has over 13 million users, and the official announcement affects not only the users but also the substantial funds in their accounts. However, the withdrawal function on the BitMart platform has become a topic of much speculation.

Regarding BitMart's closure, community discussions have focused on two aspects:

One side believes that BitMart may have experienced a fund explosion. Crypto KOL Joes pointed out that there had been unusual activity in BitMart's hot wallet address, and there has been no clear response regarding issues like account freezes, abnormal fund withdrawals, and transaction arrivals.

Others have pointed out that the chaotic internal management of BitMart is the main reason for the shutdown. WEEX BD manager DI stated, "The internal atmosphere at BitMart is chaotic, constantly deceiving employees, traders, and KOLs, and refusing to pay these people their deserved salaries and bonuses." Some have also posted that BitMart previously defrauded a member of a certain Meme coin community out of $30,000 through listing fees; others have checked the withdrawal announcement and found that BitMart has set up numerous barriers for user withdrawals, prohibiting automatic withdrawals and instead adopting manual operations, which may pose a risk of misappropriating user funds.

Of course, the truth will take some time to verify, and it is currently unclear whether this is a result of competitive black PR attacks or a case of "the wall falling and everyone pushing."

Additionally, if the shutdowns of exchanges like BitMEX and BitMart are merely signals of the bear market hitting bottom, the layoffs at many compliant exchanges in the U.S. may also be one of the indicators of the bear market.

Coinbase, Kraken, Gemini Layoff Wave: Crypto Exchanges Amputate to Survive

In May of this year, Coinbase CEO Brian Armstrong announced a 14% layoff, citing market conditions and the company's transition to an AI-native architecture. Combined with previous statements from Coinbase platform head Rob Witoff that "most Coinbase engineers run 5 to 10 AI Agents simultaneously, and the combined work capacity of these AI Agents is equivalent to about 1,200 employees," it is clear that AI has had a significant impact on the personnel organization of exchanges.

In March of this year, Gemini officially announced that its workforce has been reduced by about 30% since the beginning of the year and is introducing AI tools to improve productivity. Last year, it incurred a loss of $500 million, and the plummeting stock price post-IPO and the lackluster market conditions have also put considerable performance pressure on Gemini.

Furthermore, the parent company of the U.S. crypto exchange Kraken, Payward, announced in May this year that it would lay off about 150 people to streamline its organizational structure and prepare for an upcoming initial public offering (IPO).

In today's market environment, not only are small exchanges struggling, but large exchanges also need to reserve "winter supplies" to survive the bear market to avoid following the path of shutdown.

After the Wave of Exchange Shutdowns, Who Will Bear the Losses? Who Will Take Over Users?

Compared to the exchanges that have confirmed their closure and the unclear channels and timelines for fund withdrawals, many are more concerned about the corresponding liquidation losses and how users will handle them after the closures of BitMEX and BitMart. In this regard, BitMEX's situation is more awkward, while BitMart's users and platform have received numerous "takeover offers" from other exchanges.

BitMEX May Retain Over 622 BTC Due to Forced Liquidation

As mentioned earlier, the BitMEX liquidation insurance fund may be the culprit behind the platform's inability to continue operations.

Because of its aggressive liquidation rules and mechanisms, BitMEX is currently facing a proposed class action lawsuit filed in the Southern District of New York by BKX Services Inc. and David Namdar. The plaintiffs claim that the exchange is involved in the forced liquidation of leveraged positions to retain 622.66 BTC that should have been returned to traders.

BitMart's Takeover Offers: Huobi, Websea, MSX.COM All Step In

After the announcement of BitMart's shutdown, many exchanges and crypto platforms have showcased their efforts, starting their own "talent acquisition battle."

Huobi's official statement welcomed BitMart users for C2C trading; BitMart employees also have a dedicated channel to join Huobi HTX.

Bruce, the founder of MSX.COM, immediately posted upon seeing the shutdown announcement, saying, "Don't close, I'll acquire." This shows a certain heroic spirit of rescuing the distressed.

Websea also announced that it has opened an "Anjia Channel" to facilitate BitMart users in changing platforms. Blockfinex also expressed similar sentiments.

One can only say that the real business battle may be hidden in the tweets promoting "peaceful relocation," hoping that BitMart users' assets will ultimately be handled properly.

Conclusion: The Wave of Shutdowns in the Crypto Industry Continues, It is Premature to Say the Bear Market Has Hit Bottom

As of today, this bear market, which has lasted for more than half a year, continues. Before BitMEX and BitMart fell, the wave of project closures in the industry had already begun. In the past week, crypto research institutions Hazeflow, Cardano ecosystem wallet SecondFi, DEX aggregation protocol Odos, and DeFi platform Dango have all shut down, and many projects have quietly "softly exited"—stopping updates on social media and even disappearing from their teams.

Given the current situation, although cases of exchanges shutting down have emerged, it is still difficult to conclude that the bear market has truly hit bottom. After all, the crypto industry has not reached a point of complete despair, nor has it experienced historical-level blowups like Mt.Gox or FTX.

Regardless, the industry continues, as stated in the last tweet released by BitMart: "The future still belongs to blockchain."