Key Takeaways
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Tom Lee has attributed Bitcoin’s steep decline to a “mechanical glitch”.
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He also publicly backed investor Mike Alfred’s accusation that higher entities are intentionally pushing Bitcoin lower.
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Some analysts are expecting Bitcoin to fall toward $80,562.
Bitmine chairman and well-known strategist Tom Lee has claimed that a “mechanical glitch” has played a central role in Bitcoin’s accelerating price drop, while also agreeing that deliberate market pressure may be pushing prices lower.
The comments come as Bitcoin fell close to $83,000 on Friday, its lowest price since April, with analysts warning that a bear market has firmly taken hold.
Speaking on CNBC’s Power Lunch on Thursday, Lee linked the downturn to a technical failure in an exchange’s stablecoin pricing feed during the Oct. 10 crash, which triggered a wave of automatic liquidations.
Discussing the Oct. 10 crash, Lee said:
“On a specific exchange, a stablecoin’s price varied from other exchanges… it dropped to $0.65. But that only happened within this exchange because of liquidity.
Lee described the core issue as an automation flaw tied to ADL (Auto-Deleveraging Liquidation), a mechanism he compared to a margin call.
“This error is actually essentially a bug, a code error… in retrospect, they would have pulled pricing from across exchanges rather than rely on internal quotes,” he added.
When asked who was affected and where the bug originated, Lee declined to identify any market-making firms.
“I am aware of names, but… I’m not someone who wants to name names,” he said.
Lee compared the malfunction to historical structural failures:
“In 1987, portfolio insurance was the quote glitch and that triggered the cascade… in 2009, it was really the collateral wasn’t secure in real estate… in crypto, this code of ADL and the way they pull prices, never going to happen again.”
He said the crypto market has been “limping along since Oct. 10,” describing the current situation as an echo of that event.
While Lee refused to mention any names when discussing the technical glitch, many of the signs point to the malfunction which unfolded with Binance.
On Oct. 10-11, screenshots showing USDe, a “synthetic dollar” created by Ethena Labs, dropping to $0.65 on Binance spread across social media, creating fears of a catastrophic depeg.
