In a recent interview with CNBChe explained that the events of October 10 did more than trigger price fluctuations. They have damaged the balance sheets of major market makers, the companies responsible for providing buy and sell quotes that keep the digital asset ecosystem functioning.
When these companies suffer heavy losses, they are forced to withdraw, and this shrinkage can plunge the entire market into a period of fragility where even small transactions cause prices to move more than usual.
Why market makers are important
Crypto market makers play a similar role to central banks in traditional finance. They help stabilize prices and ensure that traders can enter or exit positions without causing major disruption. When the October sell-offs wiped out large positions, many of these companies had to reduce their exposure. Balance sheets tightened and trading desks went into capital preservation mode.
This process creates what Lee called a multi-week deleveraging cycle, in which reduced activity fuels more volatility, which then leads to further pullbacks. Liquidity is simply the ease with which an asset can be traded without large price swings, and Lee noted that the current environment shows how quickly liquidity can evaporate when market makers take a step back.
A recent example occurred during a sharp intraday move Ethereum in early November, when a relatively small wave of selling caused a larger-than-expected decline on several major exchanges. Analysts linked the move to weak order books, a telltale sign of tight liquidity conditions. This reflects the same dynamic described by Lee: when major liquidity providers withdraw, the market becomes much more sensitive to routine activity.
Lee also pointed out that in these weak conditions, assets like Bitcoin and Ethereum react to risk earlier than traditional stocks. This makes crypto a leading indicator of broader market sentiment. Recent data supports this idea. During a slowdown in global stocks in mid-November, Bitcoin began falling almost a full day before major stock indexes showed weakness. Investors often view this early move as a sign that cryptocurrency price action may reveal stress before it spreads.
Learn more about Tom Lee
Tom Lee recently highlighted that crypto stablecoins have become the largest buyers of gold in the world, driving price increases since early 2026. He noted that this trend is not bearish for Bitcoin but rather paves the way for higher future prices for $BTC.
This reinforces what we said earlier this year…
– Crypto stablecoins are the largest buyer of gold in the world
– and have been the sole driver of the price rise since the start of 2026This is not bearish for Bitcoin $BTC but sets a higher future price for BTC
– Thomas (Tom) Lee (not the drummer) FSInsight.com (@fundstrat) November 26, 2025
The accumulation of gold by stablecoins reflects growing demand from institutions and cryptocurrencies for safe-haven assets, while Bitcoin benefits indirectly as market participants anticipate greater cross-asset flows and increased liquidity in digital markets.
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