BitMEX: "1011" Crash Breaks Through Market Maker Neutral Strategies, Market Liquidity Drops to Lowest Level Since 2022

Odaily News: Cryptocurrency trading platform BitMEX pointed out in its latest report that the "1011" crash shockwave impacted market makers, forcing them to hold large amounts of cryptocurrency. This crash led to approximately $20 billion in cascading liquidations, severely damaging market makers' neutral strategies and causing market liquidity to fall to its lowest level since 2022.

BitMEX stated, "When the ADL (Auto-Deleveraging) mechanism was triggered, forcing the closure of the short positions market makers used for hedging, these institutions were compelled to hold unhedged spot positions amid the market's rapid decline. This situation broke the promise of the 'neutral strategy' for perpetual contracts, leading market makers to withdraw liquidity globally in Q4 2025, thereby reducing order book liquidity to its lowest level since 2022."

As a large number of copycats flooded in, the 'easy returns' from delta-neutral funding rate arbitrage significantly shrank, with annualized returns dropping below 4%. Meanwhile, platforms operating on a B-book model captured substantial profits, the DeFi perpetual contracts market remains vulnerable to manipulation, while the traditional finance perpetual contracts market experienced explosive growth. (CoinDesk)