The large crypto crash in October decimated market makers, ending an period the place crypto merchants had been capable of make straightforward cash, says crypto change BitMEX.
The crash between Oct. 10 and 11 worn out $20 billion within the “most harmful occasion for classy market makers in crypto historical past,” BitMEX stated in its State of Crypto Perpetual Swaps in 2025 report launched on Thursday.
A suggestions loop of auto-deleveraging, the place exchanges liquidate worthwhile, leveraged positions to cowl themselves and stop additional losses, broke the market makers’ “‘protected’ delta-neutral methods,” forcing them to drag liquidity and go away orderbooks at multi-year lows, BitMEX stated.
“For years, perpetual swaps have been an important supply of alpha for yield: farm the funding, seize the unfold, and belief the change engine to take care of the partitions,” it added. “That period of straightforward yield and structural stability appeared to finish in 2025.”
Thinnest crypto order books since 2022
Market makers are important to making sure there are all the time counterparties for trades. They normally maintain crypto and wager in opposition to, or brief, the token to reduce danger.
When auto-deleveraging mechanisms through the October crash forcibly closed the market makers’ brief hedges, they had been left holding “bare spot luggage in a free-falling market.”
“This breach of the ‘neutrality’ promise induced MMs [market makers] to drag liquidity globally in This fall, ensuing within the thinnest orderbooks seen since 2022,” BitMEX stated.
BitMEX stated that the technique, the place merchants might arbitrage between the spot and futures markets, “has turn out to be overcrowded” with funding charges dropping to 4%, “killing the funding charge commerce” and underperforming Treasury payments.
Market makers break up, whereas customers transfer to on-chain perps
In the meantime, BitMEX added that final yr additionally noticed the market break up into “honest matchers” and “predatory B-E book exchanges,” the place the platform operates as a market maker and has “‘irregular buying and selling’ clauses to void worthwhile trades.”
“It grew to become clear that aggressive B-E book operations had been taking the opposite aspect of consumer trades and refusing to pay out once they misplaced,” BitMEX stated.
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BitMEX additionally famous that crypto buying and selling volumes “migrated aggressively to high-performance Perp DEXs like Hyperliquid,” however warned that decentralization isn’t the answer for market manipulation.
It stated that the Plasma (XPL) token launch in September gave attackers a “liquidation map” and noticed illiquid pre-launch tokens with no value oracle being manipulated to set off liquidations on on-chain perp positions.
BitMEX argued the assault “demonstrated that on-chain transparency can not shield customers as a lot as credible [centralized exchanges] can.”
“The failure of unproven, high-risk platforms has cleared the air for battle-tested exchanges and real improvements to thrive,” it stated.
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