CEX: "1011" plunge forced market makers to hold a large amount of cryptocurrencies, with market liquidity dropping to its lowest level since 2022.

On January 8, according to CoinDesk, the crypto trading platform CEX reported that the “1011” crash wave impacted market makers, forcing them to hold large amounts of cryptocurrencies. This crash led to approximately $20 billion in cascading liquidations, severely damaging market makers’ neutral strategies and causing market liquidity to drop to its lowest level since 2022. CEX stated, “When the ADL (Auto Deleveraging) mechanism is triggered and market makers are forced to close their hedged short positions, these institutions, in the face of rapid market declines, are compelled to hold unhedged spot positions. This situation breaks the promise of the perpetual contract ‘neutral strategy,’ leading market makers to withdraw liquidity globally in Q4 2025, thus reducing order book liquidity to its lowest since 2022.” As many imitators flooded in, the Delta neutral “easy profit” relying on funding rate arbitrage shrank significantly, with annualized returns dropping below 4%. Meanwhile, platforms operating in B-book mode reaped substantial profits, and the DeFi perpetual contract market remains susceptible to manipulation, while the traditional financial perpetual contract market experienced explosive growth.