Liquidity Crunch Gripping Crypto Market Makers, Says Tom Lee

Friday Nov 21 2025 01:10

Duration

2 min

  1. 1. Liquidity Squeeze on Crypto Market Makers: Tom Lee's Analysis

  2. 1.1 The Crucial Role of Market Makers

  3. 1.2 Bitcoin's Trajectory After the Correction

  4. 1.3 Potential Recovery Timeline

Liquidity Squeeze on Crypto Market Makers: Tom Lee's Analysis

Recent downward pressure in the cryptocurrency market could stem from significant balance sheet vulnerabilities among market makers, according to Tom Lee, chairman of Ether treasury company BitMine. Speaking with CNBC, Lee posited that the October 10th market correction, which witnessed a record $20 billion in liquidations, caught some market makers off guard, leading to substantial liquidity challenges. With diminished operational capital, compounded by reduced revenue from traders, market makers face a challenging environment. Consequently, they've been compelled to further shrink their balance sheets to free up capital. "If they've got a hole in their balance sheet that they need to raise capital [to fill], they need to reflexively reduce their balance sheet, reduce trading. And if prices fall, they've got to then do more selling. So I think that this drip that's been taking place for the last few weeks in crypto reflects this market maker crippling," Lee explained.

The Crucial Role of Market Makers

Lee, also the co-founder of Fundstrat, likened the significance of crypto market makers to that of "central banks," suggesting that the market may endure further volatility for a few weeks until these liquidity issues are resolved. "Today's stock market looks a lot like an echo of what happened on October 10th. But on October 10th, that liquidation was so big [...] it really crippled market makers," he stated. "And market makers are critical in crypto because they provide liquidity. I mean, they act almost as the central bank in crypto."

Bitcoin's Trajectory After the Correction

Bitcoin (BTC), valued at over $121,000 before the October 10th correction, has since retraced to $86,900, mirroring the broader market trend.

Potential Recovery Timeline

Lee anticipates potentially another two weeks of market maker unwinding before the market initiates a recovery. He referenced a similar event in 2022: "And so in 2022, it took eight weeks for that to really get flushed out. We're only six weeks into it. So I kind of concur. I think crypto, Bitcoin and Ethereum are in some ways a leading indicator for equities because of that unwind. And now this sort of limping and weakened liquidity."

Risk Warning: This article is provided for informational purposes only and does not constitute investment advice, investment research, or a recommendation to trade. The views expressed are those of the author and do not necessarily reflect the position of Markets.com. When considering shares, indices, forex (foreign exchange), and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and may not be suitable for all investors. Leveraged products can result in capital loss. Past performance is not indicative of future results. Before trading, ensure you fully understand the risks involved and consider your investment objectives and level of experience. Cryptocurrency CFD trading restrictions may apply depending on jurisdiction.

Default Author Avatar

Written by:

Liam James

Asset List

View Full List
Most Traded Commodities Indices Crypto Shares Forex
Asset
Sell
Buy
Change (%)

Trade Now

Trade Now

Trade Now

Trade Now
Asset
Sell
Buy
Change (%)

Trade Now

Trade Now

Trade Now

Trade Now
Asset
Sell
Buy
Change (%)

Trade Now

Trade Now

Trade Now

Trade Now
Asset
Sell
Buy
Change (%)

Trade Now

Trade Now

Trade Now

Trade Now
Asset
Sell
Buy
Change (%)

Trade Now

Trade Now

Trade Now

Trade Now
Asset
Sell
Buy
Change (%)

Trade Now

Trade Now

Trade Now

Trade Now

Latest

View all
brent crude oil

Thursday, 13 August 2026

Duration

5 min

Oil Prices Tumble: Demand and Inventory Build
gold-trading

Wednesday, 12 August 2026

Duration

7 min

Gold Price Today, August 13: Gold Climbs Above $4,400 as Cooler US CPI Cuts Fed Hike Bets
tsmc-stock

Wednesday, 12 August 2026

Duration

7 min

TSMC Stock Rises 1.7% as AI Infrastructure Rally Lifts Chip Sector

Latest news

gold

Thursday, 13 August 2026

Indices

Gold Price Today, August 14: XAU/USD Falls Below $4,350 as Profit-Taking Deepens

sandisk-stock

Thursday, 13 August 2026

Indices

SanDisk Stock Jumps Nearly 14% on Bullish 2030 Targets, Lam Research Gains Over 3%

kospi

Thursday, 13 August 2026

Indices

KOSPI Rises 2.7% Towards 7,000 as SK Hynix Gains 6% and Kioxia Jumps 7%

Thursday, 13 August 2026

Indices

EUR/USD Holds Near 1.1535 as Flat US PPI Supports Fed Pause Bets

gold rate in dubai

Thursday, 13 August 2026

Indices

Gold Rate in Dubai Today Falls as Global Bullion Prices Retreat

brent crude oil

Thursday, 13 August 2026

Indices

Oil Prices Tumble: Demand and Inventory Build

gold-trading

Wednesday, 12 August 2026

Indices

Gold Price Today, August 13: Gold Climbs Above $4,400 as Cooler US CPI Cuts Fed Hike Bets

tsmc-stock

Wednesday, 12 August 2026

Indices

TSMC Stock Rises 1.7% as AI Infrastructure Rally Lifts Chip Sector

WTI vs Brent Crude Oil

Wednesday, 12 August 2026

Indices

Oil Prices Fall Over 1% as OPEC and IEA Cut 2026 Demand Forecasts

bank-of-japan

Wednesday, 12 August 2026

Indices

USD/JPY forecast: Rate gap limits impact of US and Japanese intervention

See all news