A liquidity crisis in the DeFi sector sees $12 billion idling with 95% of capital unused following market structural changes post-October 2025, impacting ETH and BTC liquidity.
The crisis emphasizes fragility in DeFi systems, leading to significant liquidity drops in major cryptocurrencies, affecting institutional flows and sparking strategic adjustments across decentralized finance platforms.
The latest DeFi liquidity crisis results in $12B sitting idle, with 95% unused capital. Several structural changes post-October 2025 have contributed significantly to this situation, especially impacting major assets like ETH and BTC.
Key players such as Aave and Sky (formerly MakerDAO) are notably involved. Aave’s leadership has seen a record surge in ETH deposits, while Sky’s shift reflects a significant governance evolution.
BTC and ETH Suffer Amidst Liquidity Decline
BTC and ETH have seen significant liquidity declines, with orderbook depths contracting post-crash. These developments have triggered effects across altcoins and the derivatives markets due to the flows emanating from market disruptions.
Analysts highlight a near $1B withdrawal from BTC ETFs, driven by U.S. institutions’ risk-off stance. Current on-chain data show robust ETH inflows, underscoring the adoption of delta-neutral DeFi strategies despite the market downturn.
Liquidity Patterns Shift Post-October 2025 Crash
Past liquidity events, such as the October 2025 crash, caused persistent liquidity shifts from centralized to decentralized exchanges. Previous bear phases saw capital exits primarily towards CEXes, emphasizing past structural vulnerabilities.
Experts highlight that current strategies focus on robust capital management. Increased DEX activity and delta-neutral strategies illustrate a change from historical over-leveraging practices, which led to severe liquidity challenges in similar past scenarios.
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