Tom Lee Warns of a Major Balance Sheet Hole Among Crypto Market Makers
Well-known analyst Tom Lee has issued a new warning to the crypto community, stating that one or two major market makers may currently be facing a significant balance-sheet deficit. According to Lee, this issue is creating instability across the market as large players attempt to trigger liquidations and force a deeper short-term price drop.
Tom Lee is the managing partner and head of research at Fundstrat Global Advisors, and a board member at Bitmine. His market commentary often influences both institutional and retail sentiment.
Market Makers Under Pressure
Lee stated that certain market makers appear to be experiencing a serious imbalance in their books.
He suggests this has led to aggressive behavior from larger players, who may be intentionally hunting for liquidity.
He describes the dynamic as follows:
• big players are circling the market like sharks
• their goal is to trigger forced liquidations
• this could result in sharp, sudden price drops
Such conditions typically emerge when a liquidity provider has exposure that becomes too large to manage during volatility.
Short-Term Pain, Long-Term Perspective
Despite the warning, Lee maintains an optimistic outlook for the broader cycle, especially for Ethereum.
He believes the current turbulence is temporary and does not change the long-term supercycle narrative for ETH.
His view:
• short-term pain is likely
• structural fundamentals remain intact
• the ETH supercycle thesis is unaffected
This aligns with Lee’s previous predictions that Ethereum could outperform later in the cycle as macro conditions improve.
Strong Warning Against Leverage
One of Lee’s strongest messages was directed at retail traders: now is not the time to use leverage.
With liquidity stressed and market makers under pressure, highly leveraged positions are the first to be wiped out.
Lee emphasized that the smartest move in such an environment is capital preservation, not aggressive trading.
What This Means for the Market
If Lee’s warning is correct, near-term volatility may continue as large players attempt to stabilize their books.
However, long-term fundamentals for major assets like ETH and BTC remain intact, according to his analysis.
The combination of liquidity stress, forced liquidations, and market manipulation attempts can create rapid price swings — but historically, these periods have often preceded strong recoveries once the imbalance is resolved.
