Risks of Low-Liquidity Crypto Futures: Understanding Bybit's Delisting Patterns

The delisting of low-liquidity crypto futures by exchanges like Bybit has emerged as a critical factor shaping market dynamics and investor risk profiles in 2023–2025. As the crypto derivatives market navigates structural shifts, Bybit's systematic removal of underperforming assets reflects a broader industry effort to balance liquidity preservation with risk mitigation. However, these actions also expose vulnerabilities in market depth and investor preparedness, particularly during periods of macroeconomic stress. This analysis examines Bybit's delisting patterns, their implications for risk management, and their role in the evolving lifecycle of crypto markets.

Bybit's Delisting Mechanisms: Criteria and Consequences

Bybit employs both manual and automated delisting protocols to address low-liquidity futures. For instance, derivative contracts are automatically delisted when the last traded price falls below 20 times the tick size or reaches 50 times the tick size. A contract with a tick size of 0.0001, for example, would be removed if its price drops below 0.002 USDT. Manual delistings, on the other hand, are triggered by factors such as project viability concerns, regulatory compliance issues, or extreme market conditions. In November 2023, Bybit delisted seven spot trading pairs-including GALFT/USDT and PIXFI/USDT-citing low liquidity and project sustainability risks.

These mechanisms aim to protect traders from volatile or illiquid assets but can also create abrupt liquidity gaps. For example, the October 2025 delisting of 15 perpetual contracts (e.g., BDXN, NODE) occurred amid renewed U.S.-China trade tensions, which had already triggered a $19 billion liquidation event in derivatives markets. Such actions highlight the tension between maintaining market integrity and preserving access to niche assets.

Market Liquidity and Investor Risk: A Dual-Edged Sword

Bybit's delisting practices have had mixed effects on market liquidity. On one hand, they reduce exposure to assets prone to flash crashes or forced liquidations. On the other, they contribute to a decline in open interest, particularly in perpetual futures. As of November 2025, notional open interest in perpetual contracts remained stagnant below $10 billion, a level not seen since the October liquidation event. This stagnation reflects a broader shift in trader behavior: investors have increasingly favored options over leveraged futures, with BTC and ETH options seeing rising open interest as a defensive strategy.

The October 2025 liquidation event underscores the risks of low-liquidity environments. Renewed trade tensions between the U.S. and China triggered a cascade of forced liquidations, eroding confidence in leveraged positions. Traders' reluctance to re-enter the market post-event has further exacerbated liquidity challenges, creating a self-reinforcing cycle of caution according to market analysis.

Market Lifecycle Analysis: Growth, Decline, and Structural Maturity

Bybit's delistings have influenced the crypto market lifecycle, particularly during growth and decline phases. In October 2025, the Federal Reserve's rate cut initially spurred short-term gains in Bitcoin and Ethereum, but volatility remained subdued as traders grappled with regulatory uncertainties and tepid ETF flows according to market reports. This behavior suggests a maturing market, where digital assets are becoming more sensitive to macroeconomic trends and less reliant on speculative fervor.

However, the October liquidation event revealed structural fragilities. During sharp sell-offs, liquidity in crypto derivatives markets dried up rapidly, exposing the lack of two-sided trading participation and the pro-cyclical nature of leveraged positions according to market analysis. Bybit's post-event analysis emphasized the need for diversification across trading platforms and the adoption of battle-tested strategies to mitigate sudden liquidations as reported in market analysis.

Risk Management Strategies in a Low-Liquidity Era

To address these challenges, Bybit has adjusted its risk management offerings. In 2025, the exchange reduced the minimum subscription threshold for its Private Wealth Management (PWM) program by 50%, expanding access to institutional-grade strategies for high-net-worth investors. This initiative aimed to provide tailored portfolio management solutions, particularly during volatile periods. The PWM program's top-performing fund demonstrated resilience during prior market fluctuations, underscoring the value of disciplined, data-driven approaches as reported in analysis.

For individual investors, the key lessons are clear: diversification across asset classes and trading platforms, hedging with options, and avoiding over-leveraged positions in low-liquidity assets. Bybit's delistings also highlight the importance of monitoring tick size thresholds and price movements in derivative contracts to avoid unexpected exits from positions as outlined in their help center.

Conclusion

Bybit's delisting of low-liquidity crypto futures underscores the evolving interplay between market integrity and investor risk. While these actions aim to stabilize trading environments, they also expose systemic vulnerabilities, particularly during macroeconomic shocks. As the crypto market transitions toward greater institutionalization, investors must adopt adaptive risk management strategies that account for both structural shifts and the cyclical nature of liquidity. In this context, Bybit's practices serve as a case study in the broader challenge of balancing innovation with stability in a rapidly evolving asset class.