BitMEX: 1011 Crash Forces Market Makers to Hold Large Amounts of Cryptocurrency, Market Liquidity at Lowest Level Since 2022

According to CoinDesk, cryptocurrency exchange BitMEX stated in a recent report that the 1011 crash impacted market makers, forcing them to hold large amounts of cryptocurrency. The crash resulted in approximately $20 billion in liquidations, severely affecting market makers' neutral strategies and causing market liquidity to drop to the lowest level since 2022. BitMEX explained that when the ADL (Auto-Deleveraging) mechanism was triggered, forcing market makers to close out their unhedged short positions used for hedging, these institutions were left holding unhedged spot positions in a rapidly declining market. This situation broke the promise of perpetual contract 'neutral strategies,' leading market makers to withdraw liquidity globally in the fourth quarter of 2025, resulting in order book liquidity dropping to the lowest level since 2022. With a surge of imitators entering the market, Delta neutral strategies relying on funding rate arbitrage saw significant profit reduction, with annualized returns falling below 4%. Meanwhile, platforms using the B-book model reaped substantial profits, the DeFi perpetual contract market remains susceptible to manipulation, and the traditional financial perpetual contract market is experiencing explosive growth.

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