BitMEX: The crash forced market makers to hold large amounts of cryptocurrency, with market liquidity dropping to its lowest level since 2022

According to CoinDesk, the cryptocurrency trading platform BitMEX pointed out in its latest report that the crash has impacted market makers, forcing them to hold large amounts of cryptocurrency. This crash resulted in approximately $20 billion in cascading liquidations, severely damaging the neutral strategies of market makers and causing market liquidity to drop to its lowest level since 2022.

BitMEX stated that when the ADL (Auto Deleveraging) mechanism is triggered and market makers are forced to liquidate their short positions used for hedging, these institutions are compelled to hold unhedged spot positions in the face of a rapid market decline. This situation undermined the commitment to neutral strategies in perpetual contracts, leading market makers to withdraw liquidity globally in the fourth quarter of 2025, thus reducing order book liquidity to its lowest level since 2022.

As a large number of followers entered the market, the Delta neutral easy profits relying on funding rate arbitrage significantly shrank, with annualized returns dropping below 4%. Meanwhile, platforms operating under the B-book model reaped considerable profits, the DeFi perpetual contract market remained susceptible to manipulation, while the traditional financial perpetual contract market experienced explosive growth.