Tom Lee: The sharp drop on October 11 was caused by an abnormal decline in USDE on a certain trading platform, triggering automatic liquidation.

Tom Lee stated that the crypto market has numerous automated processes, such as ADL (Automatic Deleveraging). This system triggers forced liquidation when the price of a user's account assets or collateral falls. He pointed out that while USDE maintained a $1 price on other exchanges, one exchange's internal quote plummeted to $0.65. Due to insufficient liquidity on that exchange, the ADL mechanism was triggered, leading to the automatic liquidation of numerous accounts. This chain reaction eventually spread throughout the market, resulting in the liquidation of tens of thousands of crypto accounts within minutes. Tom Lee believes this is essentially a systemic risk caused by a code vulnerability: the exchange incorrectly relied on its internal pricing system to set stablecoin valuations instead of collecting cross-platform price data. He further stated that this incident caused a significant reduction in the capital of market makers and trading institutions. When shrinking trading volume leads to a drop in coin prices, these institutions need more capital to maintain operations, thus being forced to further shrink their balance sheets, eroding the market's foundation. He concluded that code inevitably contains vulnerabilities, and leverage is the real source of risk in the crypto market.