TLDR
- BMNR stock plunged 10.83% as crypto-linked equities face liquidity pressure
- Tom Lee attributes the decline to market makers damaged in October’s $20 billion liquidation event
- BitMine holds $3.7 billion in unrealized losses on its Ethereum treasury
- Lee expects several more weeks of selling pressure as market makers repair balance sheets
- Bitcoin fell from $121,000 to $86,900 following the October crash
BitMine Immersion Technologies shares dropped 10.83% in morning trading. The decline reflects ongoing stress in crypto markets as liquidity providers struggle to recover from October’s massive liquidation event.
Bitmine Immersion Technologies, Inc., BMNR
Tom Lee, BitMine’s chairman and Fundstrat co-founder, identified the root cause. Market makers suffered major damage during the October 10 crash that wiped out $20 billion in leveraged positions.
These liquidity providers now face serious balance sheet problems. They’re being forced to reduce trading operations at exactly the wrong time.
“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 told CNBC. “And if prices fall, they’ve got to then do more selling.”
This forced selling creates a vicious cycle. As market makers pull back, liquidity dries up across Bitcoin, Ethereum, and crypto-linked stocks.
Market Makers Act as Crypto’s Central Bank
Lee compared market makers to central banks in traditional finance. Their role in providing liquidity is that critical.
“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 ecosystem suffers. Lee warned that weakness may persist not because fundamentals are broken, but because the liquidity engine is damaged.
The stock market is showing similar patterns to the October 10 crash. “Today’s stock market looks a lot like an echo of what happened on October 10th,” Lee said.
Bitcoin traded above $121,000 before the liquidation event. It now sits near $86,900. Ethereum and other digital assets followed the same path down.
Recovery Could Take Several More Weeks
Lee referenced a 2022 episode that required eight weeks to stabilize. The current situation is only six weeks in.
“And so in 2022, it took eight weeks for that to really get flushed out,” Lee explained. “We’re only six weeks into it.”
The cleanup process creates temporary pressure that doesn’t reflect actual demand. Lee frames this as a liquidity event rather than a fundamental problem.
“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 Faces $3.7 Billion Unrealized Loss
BitMine operates one of the world’s largest Ethereum treasuries. The company now carries unrealized losses of nearly $3.7 billion on its ETH holdings.
The stock has stalled under market maker selling and ETF outflows. BitMine expanded its Ethereum position earlier this year when sentiment was bullish.
Large holders experience deeper pain when markets turn. Big positions create more friction during downturns.
Traders worry that institutional selloffs could trigger sharper declines. This fear amplifies volatility as retail investors react to large portfolio movements.
Analysts monitor ETH wallet activity for signs of restructuring or liquidation. Institutions are moving more cautiously as uncertainty spreads.
Lee’s timeline suggests pressure may ease in coming weeks as market makers repair their balance sheets and restore normal trading operations.
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