A clear look at the recent crypto market selloff, the liquidity stress facing market makers, and the technical failures that fueled sharp price drops.
The crypto market has struggled since the crash on Oct. 10. Several analysts say the decline is more than a normal price drop.
They argue that weak liquidity from damaged trading firms, combined with a technical failure on a major exchange has created the ongoing stress.
Crypto Market Makers Under Pressure
Tom Lee of BitMine spoke on CNBC about the current strain facing large trading firms.
These firms act as important liquidity providers. They help keep prices stable across exchanges and Lee said the Oct. 10 crash pulled more than $20 billion out of the market.
That shock caught several firms by surprise and many of them then faced serious funding holes.
Tom Lee says today’s weakness looks just like October 10th
– A stablecoin pricing error triggered the biggest crypto liquidation ever
– Nearly 2 million accounts were wiped out and liquidity collapsed
– These unwinds usually take 8 weeks and we are 6 weeks in pic.twitter.com/RYGgOOpAVK— Tom Lee Tracker (Not actually Tom) (@TomLeeTracker) November 20, 2025
Lee explained that when these firms lose capital, they shrink their activity to stay afloat. They cut trading and limit risk. They sell off assets to raise cash and that pressure adds more downward force on prices.
As prices drop, those same firms often need to sell even more. Lee described this cycle as a slow bleed in the weeks after the crash.
He said the situation looks similar to past unwind events. In 2022, the washout period lasted about eight weeks. The market is only six weeks into the current stress cycle, so he expects more time before the market finds steady support.
A Technical Glitch Fueled Forced Liquidations
A separate set of events may have worsened the selloff. During the Oct. 10 crash, a stablecoin called USDe briefly showed a price of $0.65 on one exchange.
Other platforms still showed it near the $1 mark. The exchange’s internal oracle accepted the lower price as valid and that mistake triggered automatic liquidations across many accounts.
Lee told CNBC that the issue came from an automation flaw. The exchange relied on its own internal pricing rather than pulling data from multiple sources. He compared the problem to a margin call that fires due to a wrong input.
Once the liquidations started, they spread through other platforms and almost two million accounts were affected. Many of those accounts were profitable only minutes before.
The exchange did not name the firms hit by the glitch. However, screenshots from Oct. 10 and Oct. 11 showed the USDe depeg event happening on Binance. After the event, Binance began refunding users who were wrongly liquidated.
The exchange said it adjusted its systems to prevent similar failures.
Lee called the glitch a code error that should not recur. He compared it to past structural failures in other markets where one problem sets off a chain reaction.
Related Reading: Bitcoin Drops to $85K as Market Liquidations Hit $831M
Claims Of Market Manipulation Surface
Market pressure is not only tied to liquidity and technical errors. Mike Alfred, a long-time Bitcoin investor said on social media that a powerful party is using futures and derivatives to push prices lower.
He claimed that this group wants to shake out traders who entered at higher levels.
Lee replied to Alfred’s post with a simple “Agree.” That short reply created heavy debate and many traders pushed back. They said these theories appear whenever the market falls.
Some users argued that heavy buying during the peak left many traders exposed, and the unwind now looks natural.
Critics also challenged the idea that manipulation only happens when prices fall. They said markets can drop when traders reassess risk or exit positions after fear takes hold.
The debate shows how tense the market has become. These kinds of drops often fuel rumours and some traders want a clear villain to blame.