The post Tom Lee Flags Market Maker Strain in Crypto Decline appeared on BitcoinEthereumNews.com. Market maker losses from an October 10 shock triggered cascading crypto liquidations. Bitcoin’s decline reflects impaired liquidity, not weakening adoption or fundamentals. Lee expects stabilization within weeks as leverage-driven stress gradually resolves. A prolonged liquidity squeeze within crypto trading networks may be the primary force behind the declines in Bitcoin and Ethereum, according to remarks from Fundstrat’s Tom Lee. His comments follow weeks of downward pressure on major digital assets and renewed questions about the stability of automated liquidation systems that support crypto markets. Lee noted that the current downturn appears tied to damage inside a major market maker’s balance sheet—a development he described as severe enough to result in forced selling and sustained weakness across order books. Liquidity Stress Traced Back to October 10 Shock In an interview with CNBC, Lee stated that the recent pattern of price declines can be linked to the incident on October 10, when an exchange-specific pricing distortion caused a stablecoin to trade at 65 cents instead of its intended peg momentarily. He added, noting that the effect spread across other exchanges as liquidations cascaded, reducing trading capacity for multiple firms viewed as core liquidity providers. According to Lee, these participants have spent the past six weeks reducing their balance sheets to re-establish capital buffers. He noted that a similar break in 2022 required roughly eight weeks to complete, suggesting the current adjustment is still underway. Bitcoin’s Slide Linked to Blow to Market Makers During the interview, Lee added that the drop from above $120,000 after October 6 to the current zone near $86,000 signals the impaired ability of market makers to absorb selling pressure. He argued the decline is unrelated to adoption trends or long-term fundamentals. Instead, he said opportunistic traders may be exerting downward pressure to force additional liquidations while liquidity remains… The post Tom Lee Flags Market Maker Strain in Crypto Decline appeared on BitcoinEthereumNews.com. Market maker losses from an October 10 shock triggered cascading crypto liquidations. Bitcoin’s decline reflects impaired liquidity, not weakening adoption or fundamentals. Lee expects stabilization within weeks as leverage-driven stress gradually resolves. A prolonged liquidity squeeze within crypto trading networks may be the primary force behind the declines in Bitcoin and Ethereum, according to remarks from Fundstrat’s Tom Lee. His comments follow weeks of downward pressure on major digital assets and renewed questions about the stability of automated liquidation systems that support crypto markets. Lee noted that the current downturn appears tied to damage inside a major market maker’s balance sheet—a development he described as severe enough to result in forced selling and sustained weakness across order books. Liquidity Stress Traced Back to October 10 Shock In an interview with CNBC, Lee stated that the recent pattern of price declines can be linked to the incident on October 10, when an exchange-specific pricing distortion caused a stablecoin to trade at 65 cents instead of its intended peg momentarily. He added, noting that the effect spread across other exchanges as liquidations cascaded, reducing trading capacity for multiple firms viewed as core liquidity providers. According to Lee, these participants have spent the past six weeks reducing their balance sheets to re-establish capital buffers. He noted that a similar break in 2022 required roughly eight weeks to complete, suggesting the current adjustment is still underway. Bitcoin’s Slide Linked to Blow to Market Makers During the interview, Lee added that the drop from above $120,000 after October 6 to the current zone near $86,000 signals the impaired ability of market makers to absorb selling pressure. He argued the decline is unrelated to adoption trends or long-term fundamentals. Instead, he said opportunistic traders may be exerting downward pressure to force additional liquidations while liquidity remains…