Prominent market analyst and BitMine Immersion Technologies chairman Tom Lee has offered three potential explanations for the recent crypto market crash that has erased billions in market capitalization over the last few days.
Firstly, Lee points out that the recent crash in AI and semiconductor stocks, especially Nvidia, may have led to margin calls, particularly for retail investors in Asian markets.
According to the analyst, this scenario might have forced investors who needed more liquidity to cover their leveraged positions to sell other assets, including crypto.
Secondly, Lee explains that investors may be selling off their existing equity and crypto holdings to free up funds ahead of Anthropic’s upcoming IPO.
Lastly, the aftermath of the huge $6.3 billion Binance hack that occurred in late October may also be playing a role.
According to Lee, some account holders may be cashing out or converting their recovered funds into stablecoins, further contributing to the sell-off.
Aside from that, Lee has also cited potential risks posed by AI to existing cybersecurity systems and increased U.S. scrutiny of semiconductor sales to Asian markets, including China, as additional factors.
However, these are all just potential explanations rather than confirmed reasons for the downturn.
Bitcoin heads for $60,000 as $2B gets liquidated
On Friday, Nov. 13, the world’s largest crypto asset, Bitcoin, fell below the psychological level of $70,000.
Further selling occurred on Saturday as BTC dropped below $66,000 and continued to decline to around $62,112 as of Sunday, its lowest level since July.
As for Ethereum, the losses are even worse, with ETH dropping to around $1,711, its lowest price since early July.
Major crypto assets like XRP and Solana (SOL) are also experiencing massive losses.
With such a sharp decline, there’s been another round of liquidations in the crypto market.
According to CoinGlass data, about $2 billion in leveraged crypto positions have been liquidated in the last 24 hours, with the majority involving bullish traders.
Additionally, this crypto crash has coincided with massive outflows from crypto exchange-traded funds (ETFs).
From Oct. 30 to Nov. 13, U.S. spot Bitcoin ETFs saw nearly $3 billion in net outflows, indicating that institutional investors are also selling off.
