Tag: deleveraging system liquidated

Tom Lee Reveals Why Bitcoin, Ethereum And XRP Are Crashing So Hard

The post Tom Lee Reveals Why Bitcoin, Ethereum And XRP Are Crashing So Hard appeared com. The post Tom Lee Reveals Why Bitcoin, Ethereum And XRP Are Crashing So Hard appeared first The total crypto market cap has erased billions within hours, falling more than 7%. Market analyst Tom Lee, co-founder of Fundstrat, explained on CNBC what is happening behind the scenes and why this crash may be tied to deeper issues in crypto liquidity. A Hidden Shock Hit the Market in October Lee says the downturn began on October 10 when a major automated liquidation event shook the crypto ecosystem. A stablecoin on one exchange briefly fell from 1 dollar to 65 cents because of low liquidity. The sudden drop triggered a chain reaction: Thousands of trading accounts were automatically liquidated Market makers suffered heavy losses Liquidity thinned across several exchanges Lee describes market makers as the central bank of crypto. When they lose money and pull back, the market becomes extremely fragile. Market Makers Are Struggling To Recover After the October shock, major market makers began repairing their balance sheets. This has caused: Less liquidity Wider spreads More forced selling Faster crashes when prices fall Lee compares it to 2022 when a similar wave of liquidations took about eight weeks to clear. He says we are six weeks into a similar cycle right now. A Software Bug Started the Cascade Lee confirms that the problem began with a software bug. The exchange used its own internal price feed instead of multiple sources. When the price briefly broke, an auto deleveraging system liquidated accounts that should not have been touched. The error wiped out nearly two million accounts in minutes. Why Bitcoin,.