For the past several weeks, crypto investors have been staring at their screens in disbelief. Bitcoin has fallen sharply from its all-time high above $126,000 to the low-$80,000 range. XRP dropped below $2. Altcoins across the board continue to bleed. And yet, nothing in the global economy appears severe enough to justify such a dramatic decline.
Even analysts with access to institutional data found themselves saying the same thing:
“This crash makes no sense.”
But now, a clearer answer is finally emerging — one that connects the timeline, the market behavior, and the unusual lack of recovery. And surprisingly, the cause wasn’t macroeconomic at all.
A single technical failure on October 10 triggered a massive chain reaction that crippled liquidity, wiped out millions of accounts, and set the entire crypto market into a slow, grinding downward drift.
On October 10, an event occurred inside one of the major crypto exchanges — not publicly, not globally, but internally — and it became the spark that ignited a market-wide collapse.
Inside this exchange, the quoted price of a supposedly stable $1.00 asset suddenly fell to $0.65.
This was not a real depeg.
It wasn’t caused by fear or external panic.
It was the result of a pricing bug inside that exchange’s internal liquidity system.
When the price feed reported $0.65 instead of $1, the consequences were immediate and catastrophic.
Most crypto exchanges rely on automated systems to protect themselves from risk.
One of these systems is ADL (Auto-Deleveraging Liquidation) — essentially a program that force-closes positions if a user’s collateral drops in value.
The fake stablecoin crash signaled to the system:
Within minutes, ADL swept through the platform.
According to Tom Lee:
“Almost 2 million crypto accounts got wiped out even though minutes before they were actually profitable.”
The liquidations didn’t just close losing trades.
They closed winning accounts too.
Positions that were healthy mere minutes earlier were erased instantly.
This wasn’t a normal market reaction.
It was an automated purge.
Crypto exchanges don’t operate in isolation. They share:
So when one exchange triggers massive forced liquidations, the shock spreads outward.
Market makers are the backbone of crypto trading.
They:
When the October 10 liquidation cascade hit:
This is the moment the entire market began what Tom Lee described as:
“limping along.”
A slow, steady bleed with no real bounce.
Investors noticed something strange: Crypto didn’t just crash — it stayed down.
No meaningful rally. No recovery. No standard “post-dip bounce.”
Just a gradual decline.
That’s exactly what happens when:
The October 10 event broke the internal structure of the market, not the fundamentals.
And that’s the key difference.
For weeks, analysts blamed:
But none of these explain why:
The October 10 liquidation cascade fits perfectly:
✔ the timing
✔ the scale
✔ the unusual market behavior
✔ the liquidity issues
✔ the absence of a real catalyst
This wasn’t a fundamental crash. It was a mechanical one.
There is a useful historical comparison.
In 2022, a similar liquidation wave hit the crypto ecosystem. It took eight weeks for the market to fully flush out the damage.
This time:
If history repeats, the market may need another two weeks before stability returns.
The good news? Once liquidity returns, crypto often rebounds sharply.
Despite the price action, nothing fundamental about Bitcoin or major altcoins has changed
The crash was triggered by: a code error, not a structural flaw in crypto.
Many long-term investors see declines from artificial liquidations as a buying opportunity, not a warning sign. Even Tom Lee himself emphasized that he is still accumulating Bitcoin and XRP. This period is frustrating, but it is temporary.
The interviewer asked the question directly:
“Who exactly caused this?”
Tom Lee avoided naming individuals or organizations, but he made one point clear:
The real cause:
A stablecoin price feed inside one exchange relied solely on internal liquidity instead of aggregated market data. When liquidity thinned, the feed collapsed, and the liquidation engine fired automatically.
Not a conspiracy. Not coordinated manipulation. Not a major institution. Just a design flaw with enormous consequences.
After weeks of confusion, speculation, and fear, the truth is more straightforward than expected.
The market crashed because:
Crypto didn’t collapse because of fundamentals. It collapsed because of a technical malfunction. And as frustrating as this situation is, it also means something important:The core value of crypto remains unchanged. The downturn is temporary. The market will recover as liquidity rebuilds. For long-term believers, this isn’t the end of the story — it’s a reset.