Deribit's Asia-Pacific Business Director, Lin Chen, has reported that the cryptocurrency market's liquidity remains 15%-20% lower following the "1011" incident. This reduction in liquidity is occurring amidst significant volatility in the U.S. stock market and ahead of a potential year-end rally.
These ongoing liquidity constraints are impacting major crypto assets such as Bitcoin and Ethereum, as funds have been migrating away from the market. This situation presents challenges for near-term rally prospects, especially given the current high levels of volatility.
Deribit Notes Significant Liquidity Reduction Post-"1011" Incident
Lin Chen of Deribit, a prominent player in the crypto derivatives exchange space, stated that market liquidity is still approximately 15%-20% lower than it was before the "1011" crash. This period of market turbulence was influenced by fluctuations in the U.S. stock market and the ongoing earnings season.
The current environment has seen a notable liquidity drain, particularly affecting the Bitcoin options market, where Deribit holds substantial influence. Chen expressed optimism that market stabilization is achievable as conditions in the U.S. stock market improve, suggesting that a year-end crypto rally could still materialize.
"The current market liquidity is still 15%-20% lower compared to before the '1011' crash. The U.S. stock market is experiencing a volatile earnings season, so most of the funds have been drained away. Fortunately, the U.S. stock market is still hitting new highs. As long as the U.S. stock market remains stable, when liquidity spreads over, I think there will still be a year-end market rally; but it's difficult to rally in the near term, and the volatility is also high."
Historical Market Dynamics: U.S. Stability as a Catalyst for Crypto Recovery
Historically, significant market events such as volatility following FOMC meetings have often resulted in temporary liquidity drops. These periods have frequently been followed by recovery phases, which are often closely tied to the stabilization of traditional financial markets.
As of November 2, 2025, Bitcoin (BTC) was trading at $110,503.87, with a market capitalization of roughly $2.20 trillion and a dominance of 59.44%. Recent price movements indicate a slight 24-hour increase of 0.36%, but a weekly decrease of 1.78%.
Market analysts suggest that persistent liquidity challenges could indeed impede market recovery. However, historical data points to the possibility of a rally if stability returns to traditional markets. Investors are encouraged to remain attentive to evolving regulatory landscapes and shifting market structures.