Prominent market analyst and BitMine Immersion Technologies chairman Tom Lee has offered three potential explanations for the recent crypto market crash, which has erased billions in market capitalization over the past few days.
Lee emphasized that these are possible explanations rather than confirmed reasons for the downturn.
Three possible factors
First, Lee said a recent decline in AI and semiconductor stocks, especially Nvidia, may have triggered margin calls, particularly for retail investors in Asian markets. That scenario could have forced investors needing liquidity to cover leveraged positions to sell other assets, including crypto.
Second, he said investors may be selling equity and crypto holdings to free up funds ahead of Anthropic's upcoming IPO.
Third, Lee pointed to the aftermath of the $6.3 billion Binance hack in late October. Some account holders may be cashing out or converting recovered funds into stablecoins, adding to the sell-off, according to the analyst.
Lee also cited potential risks from AI to existing cybersecurity systems and increased U.S. scrutiny of semiconductor sales to Asian markets, including China, as additional factors.
Bitcoin, Ether and liquidations
On Friday, Nov. 13, Bitcoin fell below the psychological level of $70,000. Selling continued Saturday as BTC dropped below $66,000 and declined to around $62,112 as of Sunday, its lowest level since July.
Ethereum's losses were steeper, with ETH dropping to around $1,711, its lowest price since early July. Major assets including XRP and Solana also saw massive losses.
According to CoinGlass data, about $2 billion in leveraged crypto positions were liquidated in the last 24 hours, with the majority involving bullish traders.
The crash coincided with large outflows from crypto exchange-traded funds. From Oct. 30 to Nov. 13, U.S. spot Bitcoin ETFs saw nearly $3 billion in net outflows, indicating that institutional investors were also selling off.
