Tom Lee: The "1011 crash" may cause a long-term market limpness; a pricing loophole on a certain trading platform triggered a chain of automatic liquidations.

Tom Lee, chairman of Bitmine, the Ethereum treasury company, stated on a podcast this Friday that the current bear market was triggered by the largest deleveraging event in crypto history last October, with an impact even greater than the FTX crash. This was due to a pricing loophole on a trading platform that triggered a chain of automated liquidations, resulting in the liquidation of over 2 million accounts globally, the destruction of one-third of market makers, and severe damage to trading platform balance sheets, causing the entire ecosystem to "limp." He believes the selling pressure is not yet fully over, and recovery will take 8-12 weeks, similar to 2022, but there are currently no clear signs of a rebound. Previously, OKX CEO Star posted on the X platform that hundreds of billions of dollars in cryptocurrency were liquidated on October 11th, and OKX observed a fundamental change in the microstructure of the cryptocurrency market from that date. Industry insiders believe the losses from this event are more severe than the FTX collapse. The root cause of the event was Binance's limited-time promotion offering USDe a 12% annualized yield and allowing it to be used as collateral without practical restrictions. USDe is essentially a tokenized hedge fund product, structurally different from low-risk money market funds like BlackRock BUIDL. Binance encouraged users to exchange USDT and USDC for USDe to earn returns, but failed to adequately emphasize the risks. Users borrowed USDT as collateral through revolving lending and borrowing, artificially creating annualized premiums of 24% to 70% or more, leading to a rapid accumulation of systemic risk. When market volatility triggered USDe's de-pegging, the chain of liquidations exacerbated the collapse of assets like WETH and BNSOL. Star points out that industry trust cannot be built on short-term profit speculation or marketing that masks risks, and Binance, as an industry leader, should bear corresponding responsibility.