Crypto markets have taken heavy losses over the past 10 days, with Ethereum down 40% and Bitcoin down 30%. Bitmine Chairman Tom Lee said the move looks less like a collapse in crypto fundamentals and more like a familiar crypto-style washout, where sentiment shocks, outside events, and structural leverage feed on each other fast.
Lee said the recent losses triggered widespread “rage quitting” across the market. While many observers framed the decline as evidence of deeper structural weakness, he argued that similar episodes have appeared repeatedly in previous cycles. By his account, Ethereum has suffered seven drawdowns of 60% or more since 2018, with that pattern showing up almost every year; he also said Ethereum fell 64% in 2025.
Prices slid even as underlying crypto metrics improved
What made the 2026 decline feel more severe, Lee said, was the mismatch between price action and underlying fundamentals. He contrasted the current move with 2022, when the downturn was tied to crypto-specific failures including NFT weakness, the collapse of Three Arrows Capital, and the failure of FTX. This time, he said, the pressure came largely from outside the crypto sector.
He pointed to the October 10 market shock, then cited a Truth Social post connected to Greenland, rising gold and silver prices, and a Kevin Warsh announcement. In his view, those events had limited direct exposure to crypto itself, yet they still damaged risk sentiment and weighed on digital asset prices.
IBIT trading and options activity drew unusual attention
Lee also highlighted analysis from Parker on X that focused on BlackRock’s IBIT ETF. According to Parker, IBIT posted a record $10.7 billion in trading volume, while options premiums reached an all-time high of $900 million. That combination suggested the downturn may have been intensified by leverage built through U.S. trading channels rather than by broad liquidations on crypto exchanges.
Parker said Bitcoin and Solana sold off together during U.S. trading hours, while liquidations on centralized exchanges stayed relatively low. Based on that pattern, he suggested that a large IBIT options position may have been a major driver behind the move instead of the usual exchange-led cascade.
He added that some IBIT holders run single-asset funds, many of them based in Hong Kong, and said that structure may isolate margin risk. Parker also linked the episode to unwinding in yen carry trades and steep losses in silver markets, pointing to stress that may have been spreading across several markets at once.
ETF options cap removal widened room for leverage
Lee said Nasdaq recently removed options contract caps for major Bitcoin and Ethereum ETFs. Parker said Nasdaq asked the SEC for immediate approval, and the change was granted on January 21; Bitcoin then fell sharply on January 29.
In Parker’s reading, removing those limits expanded leverage tied to IBIT outside crypto-native venues. Lee made the same broad point in simpler terms: when markets are already unstable, too much leverage makes price swings harsher.
Even with the selloff, Lee said Bitcoin has never delivered a negative four-year return, and Ethereum continues to post strong usage growth. He also noted that Bitmine carries no debt and earns income from staking and cash interest, while MicroStrategy shares reacted positively after the company’s recent earnings.