Discuss the reasons for ALPACA's flash crash: A wave of short selling triggered by expectations of the exchange delisting, resulting in a surge in contract positions. The market makers took the opportunity to go long and drive up prices, harvesting funds through spot price differences and a 2% hourly fee. They also utilized the automatic liquidation mechanism of the delisting (which does not require handling exit liquidity) to arbitrage in a high plateau. Yesterday, Binance suddenly adjusted the maximum leverage (effective from 14:30). Although the adjustment was less than the previous ACT incident, it precisely triggered a long-short squeeze, causing ALPACA to plummet 40% in an instant — a small rule change became the catalyst for the crash.
