Tom Lee, one of Ethereum’s best-known advocates, predicts a tough near-term period for ETH. His warning does not call into question his long-term bullish thesis: it concerns a possible contagion effect from the South Korean stock market.
In brief
- Tom Lee issues rare warning on Ethereum. He fears a decline in ETH in the short term.
- The fall of the Kospi worries the markets. Stock market losses in South Korea could spread to cryptos.
- Margin calls represent a risk. Some investors may be forced to sell their ETH to cover their losses.
- Ethereum is already showing signs of weakness. The decline in bitcoin and capital outflows from ETFs are increasing the pressure.
- Tom Lee remains optimistic in the long term. Despite his warning, he continues to believe in the potential of Ethereum.
The fall of the Kospi threatens to spread to cryptos
The Kospi index fell by more than 6% during the session on October 13, under pressure from technology stocks and semiconductor manufacturers. Samsung Electronics and SK Hynix notably recorded declines close to or above 8%.
The scale of the movement pushed Korea Exchange to activate a “sidecar” seller. This mechanism temporarily suspends certain automated orders when futures contracts experience excessive variation. Futures on the Kospi 200 then lost more than 5%.
Tom Lee fears that these stock market losses will be transmitted to the crypto market. He has writing on X:
This major drop in Korean stocks is likely spreading to cryptocurrencies.
The Fundstrat co-founder identifies two risk factors: margin liquidations at South Korean brokerage firms and the country’s high investor participation in the digital asset market.
His post ends with an explicit warning regarding Ethereum: “short-term pain for ETH” Lee, however, did not announce a specific bearish target or duration for this possible correction.
Margin calls can force ETH sales
Many investors buy stocks with money borrowed from their broker. When the value of their portfolio falls, they must provide new guarantees or reduce their debt.
If they don’t have immediate cash, they can sell other assets, including bitcoin or ether. The decline in the Kospi could therefore create pressure on Ethereum even if no event specific to the network justifies this drop.
Brokers can also automatically sell margin-funded positions when collateral becomes insufficient. This mechanism then transforms a local stock market correction into an urgent need for cash.
Tom Lee, however, did not provide any data demonstrating that Korean investors were already massively selling their ETH to meet margin calls. His scenario describes a plausible, but not yet quantified, contagion channel.
Ethereum hit an intraday low near $2,411 before rallying back to around $2,515. The asset remains down around 6% over a week and is trading near a technical level monitored around $2,500 to $2,550.
Ethereum is already accumulating several signs of weakness
The pressure from Korea comes in a less favorable context for ETH. The ETH/BTC ratio, which measures Ethereum’s performance relative to bitcoin, fell by around 4.7% in one week to close to 0.030.
This development shows that bitcoin resists better than ether during the phase of uncertainty. It contradicts, at least in the short term, the hypothesis defended by Lee of an upcoming catch-up of Ethereum.
US spot Ethereum ETFs also had several sessions of net outflows. The weakness of these flows reduces important institutional support at a time when investors seek to reduce their exposure to risky assets.
A liquidity indicator tracked on Binance also fell to its lowest level in almost seven months. Such a decline does not automatically mean that sellers dominate. It may also reflect a withdrawal of ETH to private wallets, therefore a reduction in the immediately available supply.
These signals describe a fragile market, but they do not prove that a new sustainable downtrend has begun.
Tom Lee maintains his long-term bullish conviction
The warning comes as a surprise because Tom Lee chairs BitMine Immersion Technologies, the largest treasury company dedicated to Ethereum. The group purchased an additional 12,532 ETH during the week ended October 11.
BitMine now holds 6,028,946 ETH, or approximately 4.9% of the total estimated supply of 122.1 million tokens. This reserve is worth more than $15 billion at current prices.
The pace of purchasing has nevertheless slowed as the company approaches its objective, set at 5% of supply. BitMine would only have a margin of around 77,000 ETH before reaching this threshold.
Lee continues to champion Ethereum through the development of tokenization, stablecoins, and artificial intelligence agents. He believes that these uses could put an end to several years of underperformance against bitcoin.
His warning of October 13 therefore remains tactical. He anticipates forced sales linked to the Korean stock market crisis, without abandoning his long-term growth scenario. The strength of the 2500 dollars and the evolution of the Kospi will determine if this ” pain “ remains temporary.
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