BitMEX: The "1011" crash disrupted market makers' neutral strategies, with market liquidity falling to its lowest level since 2022
Svmuu News: In its latest report, the cryptocurrency trading platform BitMEX noted that “on November 10, ” crash impacted market makers, forcing them to hold large amounts of cryptocurrency. The crash triggered approximately $20 billion in chain liquidations, severely damaging market makers’ neutral strategies and causing market liquidity to drop to its lowest level since 2022. BitMEX stated, “When the ADL (Automatic Deriving Liquidity) mechanism is triggered and forces the liquidation of short positions used by market makers for hedging, these institutions are forced to hold unhedged spot positions amid a rapidly falling market. This situation undermined the promise of the ‘neutral strategy’ for perpetual contracts, leading market makers to withdraw liquidity globally in the fourth quarter of 2025, thereby reducing order book liquidity to its lowest level since 2022. "As a flood of copycats entered the market, the 'easy profits' from delta-neutral strategies relying on funding rate arbitrage shrank significantly, with annualized returns falling below 4%. Meanwhile, platforms operating on a B-book model reaped substantial profits, the DeFi perpetual contracts market remained vulnerable to manipulation, and the traditional finance perpetual contracts market experienced explosive growth. (CoinDesk)
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