Tom Lee Says Liquidity Shift Could Spark Bitcoin Rebound After Record Deleveraging

When crypto trades through its 200-day moving average, the story is rarely “technical” alone—it’s liquidity. Fundstrat’s Tom Lee framed Bitcoin’s latest slip below that key line as the byproduct of macro frictions that can just as easily swing the other way. If those frictions abate, the same liquidity that punished prices can start doing the lifting.

Lee tied the drawdown to a cluster of pressures: fallout from the U.S. government shutdown, Treasury market dynamics, and what he called a “hawkish” Fed cut—conditions that tightened risk appetite and coincided with a major market cleanup. He also flagged the October 10 event as the largest deleveraging in crypto’s history, a mechanical purge that tends to leave lingering aftershocks for weeks.

Here’s what matters: Bitcoin trades like a high-beta liquidity proxy. Dollar strength and shifting Treasury issuance often drain the pool risk assets drink from. That’s why the break of the 200-day moving average arrived alongside forced unwinds rather than incremental selling. In crypto microstructure, perp liquidations and basis collapses do the heavy lifting, and those flows don’t respect round numbers or trendlines—they respect margin calls.

Lee’s point that “headwinds become tailwinds when you can resolve these things” is less a pep talk and more a liquidity map. If shutdown risk fades, Treasury supply pressure stabilizes, and the Fed’s tone stops leaning hawkish, liquidity can migrate back to beta. Historically, after prolonged equity strength—six consecutive months of gains—November often skews flat to positive. That backdrop has tended to cushion crypto, even if the transmission isn’t one-to-one.

The October 10 washout deserves special attention. When you get the “largest in history” deleveraging, positioning is no longer symmetrical. Some participants remain under-risked, funding normalizes, and basis rebuilds slowly. Confidence doesn’t snap back; it accretes trade-by-trade as open interest returns and liquidity depth thickens. In practice, that means choppy recoveries, retests of the 200-day, and a gradual handoff from forced sellers to discretionary buyers.

Prediction markets seem to be leaning that way. On Myriad—launched by Dastan—users are assigning a 64% chance that Bitcoin revisits $115,000 before tagging $85,000. Ethereum shows similar bias, with a 63% probability it reaches $4,500 before $2,500. That’s behavioral information, not gospel, but it reflects a willingness to re-engage if macro stops fighting the tape. As of the last 24 hours, Bitcoin and Ethereum were up 1.3% and 2.6%, trading near $103,214 and $3,403, per CoinGecko—small steps that often follow a deleveraging trough.

Where could this go wrong? Ripple effects from October 10 can persist longer than traders expect; liquidity can be patchy, and episodic USD strength has a way of interrupting rebounds. Where could it go right? If the shutdown overhang continues to clear, Treasury dynamics ease, and the Fed’s communication shifts even modestly, crypto’s sensitivity to improving liquidity can flip the narrative faster than most models anticipate.

One more layer: the industry’s leverage practices matter. Concentrated leverage on offshore venues turns macro jitters into liquidation cascades. Better margin frameworks and position limits won’t eliminate drawdowns, but they can reduce the frequency of “largest ever” events that keep institutional capital cautious. Stability attracts size; size deepens books; deeper books dull the blade of macro shocks.

Lee isn’t promising a V-shape. He’s pointing to a plausible liquidity pivot after a record cleanout. For traders, that usually means respecting the 200-day as a battleground, letting basis and funding tell the truth about positioning, and watching the dollar and Treasury curve for confirmation that the headwinds are, at last, turning to wind at your back.