Tom Lee, chairman of the Ethereum treasury company BitMine, stated that the recent downward pressure in the cryptocurrency market may be the result of significant gaps in the balance sheets of market makers.
Lee said in an interview with CNBC on Thursday that the market crash on October 10 led to a record $20 billion being liquidated from the market, ultimately catching some market makers off guard and causing severe liquidity issues.
Lee mentioned that due to reduced working capital and a decrease in trader capital, which is their main source of income, market makers are facing tough times. This has also led them to "further shrink their balance sheets" to free up more capital.
He said, "If there are gaps in their balance sheets that require them to raise funds, they need to reflexively shrink their balance sheets and reduce trading. If prices fall, they have to sell off more. So I think the continued decline in the cryptocurrency market over the past few weeks reflects the paralysis of market makers."
Lee, who is also a co-founder of Fundstrat, compared the importance of cryptocurrency market makers to that of "central banks," stating that the market may have to endure a few more weeks of pain before the liquidity issues of market makers are resolved.
He said, "Today's stock market looks very much like an echo of what happened on October 10. But on October 10, the scale of that liquidation was so large… it really paralyzed the market makers." He added:
Bitcoin (BTC) was priced over $121,000 before the crash on October 10 and has since fallen to $86,900, with most of the market following a similar pattern.
Lee indicated that it may take a few more weeks for market makers to complete their unwinding before the market begins to recover, noting that a similar situation occurred in 2022:
Related: Cathie Wood's Ark Invest significantly increased its holdings in Circle, BitMine, and Bullish during the decline of crypto stocks.
Original article: “Tom Lee speculates that troubled market makers are behind the cryptocurrency crash”
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
