Bitcoin’s $83,000 Price Drop Caused By ‘Software Glitch’ And ‘Manipulation,’ Says Tom Lee
Key Takeaways
-
Tom Lee attributed Bitcoin’s sharp decline to a “mechanical glitch”.
-
He also publicly supported investor Mike Alfred’s accusation that higher institutions were deliberately pushing Bitcoin lower.
-
Some analysts expect Bitcoin to drop to $80,562.
Bitmine president and well-known strategist Tom Lee claimed a “mechanical glitch” played a role central role We believe in Bitcoin’s accelerating price decline and also agree that deliberate market pressure may be pushing prices lower.
The comments came as Bitcoin fell to its lowest price since April, approaching $83,000 on Friday, and analysts warned that a bear market was firmly in place.
Speaking on CNBC’s Power Lunch on Thursday, Lee attributed the setback to a technical glitch in an exchange’s stablecoin pricing feed that occurred during the Oct. 10 crash, triggering a wave of automatic liquidations.
Discussing the crash on October 10, Lee said:
“On a particular exchange, the price of a stablecoin was different from other exchanges… it dropped to $0.65. However, this only happened due to liquidity on this exchange.
Lee described the underlying problem as an automation flaw tied to ADL (Automatic Deleveraging Liquidation), a mechanism he likened to a margin call.
“This bug is actually a bug, a code error… In retrospect, they would have pulled inter-exchange pricing rather than relying on internal quotes,” he added.
When asked who was affected and where the error came from, Lee declined to specify market-making firms.
“I know the names, but… I am not someone who wants to give names,” he said.
Lee compared the failure to historical structural failures:
“In 1987, it was the portfolio insurance quote error that triggered the cascade… In 2009, it was really the collateral not being safe in real estate… in crypto, this ADL code and the way it pulls prices will never happen again.”
He stated that the crypto market “has been limping since October 10” and described the current situation as a reflection of this event.
While Lee declined to name any names when discussing the technical glitch, most signs point to malfunction. It emerged with Binance.
Open 10-11 October Screenshots showing USDe, the “synthetic dollar” created by Ethena Labs, falling to $0.65 on Binance spread on social media, sparking fears of a catastrophic depeg.
