TLDR
BitMine stock dropped nearly 11% in morning trading as crypto-linked equities face pressure
Tom Lee blames the selloff on market makers damaged during the October 10 liquidation event that wiped out $20 billion
Lee says impaired market makers are reducing trading operations, creating a liquidity shortage across crypto markets
The company holds unrealized losses of $3.7 billion on its Ethereum holdings as ETH prices continue sliding
Lee expects the market maker cleanup process to take several more weeks, similar to an eight-week recovery period in 2022
BitMine Immersion Technologies stock crashed 10.83% this morning. The selloff reflects broader pressure across crypto-linked equities as market structure issues continue to weigh on prices.
Bitmine Immersion Technologies, Inc., BMNR
Tom Lee, chairman of BitMine and co-founder of Fundstrat, offered a specific explanation for the weakness. He pointed to market makers who suffered serious damage during the October 10 liquidation event.
Speaking with CNBC, Lee said the $20 billion wipeout caught market makers off-guard. These players now face balance sheet problems that are forcing them to reduce operations.
“And if they’ve got a hole in their balance sheet that they need to raise capital, they need to reflexively reduce their balance sheet, reduce trading,” Lee explained. “And if prices fall, they’ve got to then do more selling.”
This forced selling is what Lee believes is driving down Bitcoin, Ethereum, and crypto-related stocks. The pattern has persisted for weeks as damaged market makers continue unwinding positions.
Market Makers Function as Crypto’s Liquidity Engine
Lee described market makers as essential infrastructure for crypto markets. He compared their role to central banks in traditional finance.
“Market makers are critical in crypto because they provide liquidity,” Lee said. “I mean, they act almost as the central bank in crypto.”
When these players are impaired, the entire market struggles to function properly. Lee said this explains why price weakness may continue even though fundamentals remain intact.
He also drew a parallel to the stock market. “Today’s stock market looks a lot like an echo of what happened on October 10th,” he said. “But on October 10th, that liquidation was so big it really crippled market makers.”
The damage to market makers created a ripple effect. Their reduced capacity to provide liquidity is now showing up across multiple asset classes.
Bitcoin was trading above $121,000 before the crash. It has since dropped back to around $86,900. Ethereum and other digital assets followed the same trajectory.
Recovery Timeline Could Take Several More Weeks
Lee expects the cleanup process to require more time. He referenced a similar episode in 2022 that took nearly two months to stabilize.
“And so in 2022, it took eight weeks for that to really get flushed out,” Lee said. “We’re only six weeks into it.”
The unwinding process creates temporary pressure that doesn’t reflect actual demand for crypto assets. Lee argues this is a liquidity event, not a fundamental breakdown.
“I think crypto, Bitcoin and Ethereum are in some ways a leading indicator for equities because of that unwind,” he said. “And now this sort of limping and weakened liquidity.”
BitMine now operates as one of the world’s largest holders of Ethereum. The company faces unrealized losses of nearly $3.7 billion on its ETH holdings.
The stock has stalled under the weight of market maker selling and ETF outflows. BitMine expanded its Ethereum exposure earlier this year when sentiment supported long-term growth.
That confidence now meets a different reality as price corrections push portfolio values down. Large holders feel deeper shocks because big positions create more friction when markets turn.
Traders fear that any major selloff from institutions could trigger sharper declines. This fear increases volatility as retail investors react quickly to large portfolio shifts.
Analysts now watch ETH wallet activity closely to identify any movements that hint at restructuring or liquidation. Many institutions act more carefully as uncertainty spreads across crypto markets.
Lee’s explanation frames the current weakness as a temporary liquidity event that needs time to clear. If his timeline proves accurate, the pressure may ease in the coming weeks as market makers repair their balance sheets.
