Why Bitcoin's Weakness Might Be a Feature, Not a Bug—Tom Lee Explains

After October 10’s historic deleveraging event, crypto stayed down. But here’s the thing: it might not mean we’re headed for a crash.

The Real Problem: Market Maker Balance Sheets Are Bleeding

Tom Lee, Fundstrat co-founder, just connected the dots. When liquidations hit this hard, market makers’ balance sheets get slashed. To survive, they stop providing liquidity and start raising cash—basically forced quantitative tightening in crypto. Think of it like the Fed pulling money out of the system, except it’s happening at the trading desk level.

This happened in 2022 too. Back then? It lasted 6-8 weeks before things normalized. We might be looking at a similar playbook right now.

But Here’s Why Lee Isn’t Bearish

He ran the numbers on five different cycle frameworks. Two stood out—and both point to the same conclusion: this bull run’s peak is still 12-36 months away. That’s way longer than previous cycles, which is either a red flag or a sign we’re in uncharted territory.

What Happens Next

Trading volumes are still recovering post-October 10, which is dragging on related stocks. But Q4 is historically strong for both crypto and equities. More “open contracts” usually show up this quarter, so volumes should pick up in the next few weeks as investors position for year-end moves.

TL;DR: Current weakness is mechanical (margin calls + deleveraging), not cycle-ending. The real bull run might still have room to run.