Following the biggest crypto deleveraging event in five years, Tom Lee, chairman of Bitmine Immersion Technologies, said the worst may be over and a year-end bull market could be in sight.
The October 10 liquidation, driven in part by escalating U.S.-China trade tensions, wiped out billions in leveraged positions across digital assets.
“This was the largest liquidation event for cryptocurrencies in the past five years,” Lee said. “So, two weeks later, the ripple effects are still plaguing the crypto market.”
But despite the shock, Lee, who is also co-founder of research firm Fundstrat, told CNBC over the weekend that both Bitcoin and Ethereum have shown remarkable resilience, pointing to record-low open interest levels and improving technicals as signs that the markets are stabilizing.
Lee explained that the deleveraging earlier this month (a multiple of what happened during the FTX period) caused Bitcoin to fall by “3 to 4 percent.” Currently, the technicals for both Bitcoin and Ethereum are “reversing up.”
At last check on Sunday, Bitcoin was trading around $113,500. See graph below.
Lee argues that cryptocurrencies often serve as early signals for liquidity in stocks and the broader market. He said Bitcoin’s stability and Ethereum’s growing on-chain activity, particularly the use of stablecoins in both Layer 1 and Layer 2 networks, suggest improving fundamentals and could lead to broader risk-on sentiment across asset classes.
Lee’s comments come amid JPMorgan’s plans to allow institutional clients to use Bitcoin and Ether as collateral for loans by the end of the year. The move to rely on third-party custodians marks another step in Wall Street’s cryptocurrency transformation, especially as the Trump administration loosens the regulatory screws.
This is a full-circle moment for CEO Jamie Dimon, who once called Bitcoin a “pet rock.” Now, that same “rock” has been able to secure a multi-million dollar loan from the nation’s largest bank.
“It’s really helpful to see JPMorgan saying they’re open to the idea of using cryptocurrencies as collateral,” Lee added. With fundamentals improving, he argues, “we’ll see some pretty big moves by the end of the year.”
