Compiled & Edited by: TechFlow

"People always start declaring bubbles in the mid-to-late stages of the market, but the true peak usually occurs when no one is bearish anymore," Tom Lee says.

Guest: Tom Lee, Chairman of Bitmine

Hosts: Ryan Sean Adams; David Hoffman

Podcast Source: Bankless

Original Title: The World’s Largest ETH Holder - Tom Lee on Treasuries, Ethereum Dominance, and Wall Street

Broadcast Date: August 6, 2025

Key Takeaways

In this episode, we interviewed Tom Lee, Chairman of Bitmine, to discuss how his Ethereum asset management company has rapidly grown and its ambitious goal of holding 5% of the total ETH supply.

Tom is highly optimistic about Ethereum's future, believing its value could surpass Bitcoin's and forecasting a price range between $4,000 and $15,000. He also shared his analysis of market dynamics, warnings about leverage risks, and unique insights into valuations of Ethereum and NFTs like Pudgy Penguins.

Highlights

• Ethereum is one of the most significant macro investment opportunities over the next decade. Therefore, we aim to act swiftly to acquire as much Ethereum as possible at around $3,500 before its price experiences a substantial surge similar to Bitcoin's recent jumps.

• Ethereum's growth potential exceeds Bitcoin's. Its current price is clearly undervalued.

• Short-term market performance for Ethereum isn't entirely driven by its fair value. Reflecting on 2017, Bitcoin started the year at $1,000 but didn't experience a sharp rise until August. I believe Ethereum is undergoing a similar moment in 2025, as Wall Street finally begins to support it.

• Bitmine's core narrative centers on scarcity. With a clear strategic goal to acquire 5% of Ethereum, we boast a robust balance sheet, which is a major advantage. Additionally, our stock liquidity is exceptionally high, with daily trading volumes reaching $1.6 billion, comparable to Uber.

• Ethereum is a critical macro investment opportunity for the next decade. It is not only part of Wall Street's blockchain financialization but also a key component of the U.S.'s strategy for AI dominance. As the largest blockchain that complies with U.S. laws, Ethereum is legitimate and widely recognized.

• Reserve strategies offer staking yields beyond what ETFs provide. Ethereum reserve companies are not merely substitutes for Ethereum ETFs; they are vital infrastructure within the ecosystem. These companies can generate income through staking and other avenues.

• Microstrategy's stock trading volume hits $3 billion. In comparison, Ether Machine, the third-largest ETH holder, only has a trading volume of $7 million today. Our trading volume is 100 times higher than Ether Machine's. Meanwhile, Bit BTBT, the fourth-largest holder, has a trading volume of $49 million today. The liquidity gap is significant, directly impacting growth rates. To achieve high growth, assets must possess extraordinary liquidity.

• We recommend clients allocate 1% to 2% of their portfolio to Bitcoin, which has yielded a 120x return for some clients. I believe Ethereum today mirrors Bitcoin's past trajectory. While Ethereum is sometimes perceived as a quiet chain, its stability is remarkable—no downtime in ten years. This stability is crucial for Wall Street, which has decided Ethereum will be the foundational chain for their future developments.

• In the short term, I believe Ethereum's price should return to at least $4,000. By the end of this year, a price of $7,000, or even $12,000 to $15,000, is reasonable.

• People always start declaring bubbles in the mid-to-late stages of the market, but the true peak usually occurs when no one is bearish anymore

• I do own quite a few Pudgy Penguins collectibles, which I can confidently say is my favorite Ethereum NFT.

Introduction

Ryan:

Thank you all for tuning in. In this episode, we are thrilled to welcome legendary Wall Street investor Tom Lee, who is the Chairman of the newly established Ethereum reserve company, Bitmine. It's great to have you here. I must say, I never expected you to start an Ethereum reserve company in 2025, but here you are.

As of the time of recording, Bitmine holds 833,000 ETH, which accounts for approximately 1% of Ethereum's total supply. I believe you are now the world's largest Ethereum reserve company, at least among publicly traded firms. How do you feel about this accomplishment?

Tom Lee:

I think our progress has been incredibly fast. We announced this plan on June 30 and completed the acquisition on July 8. From announcement to completion, it took just 27 days to acquire Ethereum at an extraordinary pace. I believe this is crucial because MicroStrategy’s success has proven the effectiveness of its reserve strategy, delivering a 30x return.

Looking back at August 2020, MicroStrategy's stock price was $13, while Bitcoin's price surged from $11,000 to $120,000.

I believe Ethereum is one of the most significant macro investment opportunities over the next decade. Therefore, we aim to act swiftly to acquire as much Ethereum as possible at around $3,500 before its price experiences a substantial surge similar to Bitcoin's recent jumps.

Rapid Growth of ETH Reserve Companies

David:

Unlike MicroStrategy, Tom, when you launched Bitmine and announced the Ethereum reserve company strategy, other companies quickly followed suit.

Joe Lubin’s ConsenSys even launched SharpLink just five days after your announcement, and now we see a wave of Ethereum reserve companies entering the market.

Do you know which other companies are chasing you? And why do all these developments seem to cluster within a two-week timeframe?

Tom Lee:

Perhaps it's because great minds think alike. I'm not sure. You're right; the market previously featured mainly Bitcoin reserve companies, along with a few Solana reserve firms and some speculative ventures.

SharpLink was the earliest Ethereum reserve company to announce its establishment back in May. So technically, we are latecomers, following SharpLink. However, I believe Ethereum as a reserve strategy makes perfect sense.

Firstly, if you're optimistic about Ethereum's long-term growth, this provides a solid basis for a reserve strategy. Compared to ETFs, reserve strategies also allow you to earn staking yields on Ethereum.

Secondly, due to the proof-of-stake mechanism, these reserve companies essentially function as blockchain infrastructure firms. In return, they can earn staking rewards from Ethereum, which translates into net income.

For example, we currently hold over $3 billion worth of Ethereum and can earn more than 3% annually in staking rewards, which essentially becomes pure profit.

Another critical factor is scarcity. I think Bitmine's core narrative revolves around scarcity. We have a clear strategic goal to acquire 5% of Ethereum, and we boast a strong balance sheet. This is a significant advantage.

Additionally, our stock liquidity is exceptionally high, with daily trading volumes reaching $1.6 billion. This makes us the 42nd most liquid stock in the U.S. market today. In fact, our trading volume is comparable to Uber's. While Bitmine's market cap is only $4 billion compared to Uber's $184 billion, our trading volume is on par with Uber.

Ryan:

Tom, let's talk about that 5% goal. I've heard you mention this figure. The 5% refers to 5% of Ethereum's total supply, approximately 6 million ETH. If you've already acquired 833,000 ETH within just four weeks, the pace is indeed impressive.

Do you really plan to acquire 5% of all Ethereum? At current market prices, acquiring 5% of Ethereum would cost around $20 billion. Achieving this goal seems challenging, especially at current price levels.

How do you specifically plan to accomplish this? Is the 5% target a serious goal or more of a symbolic figure? If it's serious, what is your execution plan?

Tom Lee:

MicroStrategy currently holds 3.2% of Bitcoin's circulating supply. However, their actual goal is to hold at least 1 million Bitcoin, which accounts for about 5% of Bitcoin's total supply. Keep in mind, once MicroStrategy holds 1 million Bitcoin, they will play a critical role in the Bitcoin ecosystem.

For instance, if the U.S. government wants to establish a strategic Bitcoin reserve, directly purchasing 1 million Bitcoin on the open market may prove extremely difficult. Once such a plan is announced, sellers in the market will reduce, and Bitcoin's price could quickly soar to $1 million.

Thus, indirectly holding Bitcoin through MicroStrategy could be a simpler approach. I call this "sovereign protection." MicroStrategy took five years to achieve its 3% target, purchasing an average of $0.16 worth of Bitcoin daily over five years.

In contrast, Bitmine has been acquiring an average of $0.80 to $1 worth of Ethereum daily since its inception, which is 12 times faster than MicroStrategy. Therefore, we expect to reach the 5% target at a much faster pace. This is reasonable because we aim to be a responsible entity.

We fully align with Ethereum's legal and compliance principles, conducting all operations in the U.S. under Wall Street and U.S. government regulatory standards, especially given the current regulatory pressures. Equally important is that Ethereum itself will become the cornerstone of Wall Street's blockchain financialization.

Ultimately, I believe staking Ethereum is as crucial to Wall Street as gamers purchasing Nvidia GPUs. Buying Nvidia GPUs might be more profitable than actually playing games.

Similarly, if Wall Street wants to tokenize real-world assets like money markets, dollars, or stocks, they will want to hold Ethereum itself, while staking it through entities dedicated to advancing Ethereum. Therefore, I believe we play a vital role in this process by staking Ethereum.

Target: Holding 5% of Ethereum's Total Supply

Ryan:

Tom, if your acquisition pace is 12 times faster than MicroStrategy's, achieving the 5% target could take only one to two years. This is undeniably rapid progress.

Do you think Ethereum might see a similar sovereign protection strategy as Bitcoin?

For instance, I’ve heard you mention that many commercial banks, including JP Morgan, are gradually migrating their operations to blockchain. Additionally, the stablecoin legislation driven by the Genius Act essentially ties the U.S. Treasury and central banks to Ethereum, with Ethereum clearly leading in this area.

Do you think there’s a possibility for a similar sovereign protection option?

For example, could the U.S. government or other sovereign nations proactively reach out to you, saying, "We notice you hold a significant amount of Ethereum. We’d like to purchase Ethereum for the U.S. Treasury and add it to our balance sheet. Can we do this through an OTC transaction?" Do you think this scenario is plausible?

Tom Lee:

I think every point you just made is entirely reasonable, and it’s indeed a very logical assumption. Suppose our goal isn’t about protecting sovereign assets but rather about driving Wall Street’s development.

For example, the Genius Act and the SEC aim to migrate the entire financial system to blockchain, and Ethereum, as the largest blockchain, is both compliant with U.S. laws and recognized as legitimate. This is crucial. Of course, this blockchain can also be utilized by other countries and regions, but the U.S. clearly wants to strengthen its position and dominance on Ethereum.

Additionally, we need to consider not just blockchain financialization but also the advancement of artificial intelligence.

For instance, if you want to tokenize robots or other intelligent systems, you’d choose a highly secure blockchain. Therefore, the tech sector and Wall Street are gradually gravitating toward Ethereum.

Do companies like Goldman Sachs and JP Morgan want Ethereum to be dispersed across millions of different wallets? Their goal isn’t centralization, but they do want to ensure the staking process is entirely compliant, rather than letting every holder act arbitrarily.

This is also something Bitmine has emphasized from the beginning—we have a very clean balance sheet without complex capital structures.

We are making steady progress. While we haven’t officially announced our staking solution yet, we are carefully planning the next steps. After all, managing $3 billion worth of Ethereum is a very significant decision. We want to ensure that this process fully complies with U.S. regulatory requirements.

Everything you just mentioned, I completely agree with. These points highlight that Ethereum reserve companies are not merely alternatives to Ethereum ETFs; they are actually critical infrastructure within the ecosystem.

Beyond earning staking rewards, these companies can generate revenue in other ways. Therefore, I believe the Ethereum reserve companies you emphasized play a very important role in the ecosystem.

Ethereum’s Role on Wall Street

Ryan:

Tom, there’s one question that puzzles me, and I think many others share the same confusion. Why hasn’t Ethereum’s price broken past $4,000 yet? You mentioned earlier that Bitmine acquired $3 billion worth of Ethereum in just one month.

If you’ve truly purchased that much Ethereum, why hasn’t the price surged above $4,000? How are you consistently buying at $3,500? Where is all this Ethereum coming from?

Tom Lee:

We’ve learned a lot throughout this process, but since we are likely one of the largest Ethereum buyers, I can’t disclose too many details.

What I can say is that Ethereum’s short-term market performance isn’t entirely dictated by its fair value. For example, last week Ethereum’s price dropped to $3,300 because some traders triggered liquidation levels or engaged in hedging trades.

There are also individuals who view Ethereum as a "dead chain," betting on other blockchain projects and attempting to force the market into liquidation. These dynamic factors influence short-term price performance. But isn’t this exactly what Bitcoin experienced in 2017?

If we look back at 2017, Bitcoin started the year priced at $1,000 but didn’t begin its meteoric rise until August. I think Ethereum is experiencing a similar moment to Bitcoin’s 2017, as Wall Street finally starts to support Ethereum.

David:

We haven’t seen this level of interest from Wall Street in Ethereum assets and the Ethereum network for four to five years. Now, we’re witnessing capital flowing into various sectors of the Ethereum ecosystem.

When people ask why you chose Ethereum instead of a Bitcoin reserve company, for example, with companies like MicroStrategy dominating the Bitcoin reserve space, or others like Hype and Ethena, what makes Ethereum reserve companies more attractive?

Tom Lee:

First, I’m a strong supporter of Bitcoin. I believe Bitcoin is the right choice. Moreover, according to our Fundstrat research, Bitcoin’s price could potentially reach $1.5 million per coin. So Bitcoin’s narrative is still incredibly compelling.

However, Bitcoin and Ethereum play different roles in the financialized world. That’s their primary distinction. Ethereum represents the transformation of the financial world toward blockchain technology, and it’s also tied to AI and digital securities.

Ethereum essentially provides a digitally native way to connect real-world assets with digital securities. That’s why someone might choose an Ethereum reserve company. If I were an investor, I’d choose MicroStrategy because it’s a safe bet, especially within ETF fund strategies. But MicroStrategy’s allure lies in its daily accumulation of Bitcoin holdings.

On the other hand, Ethereum reserve companies are actually the only way for U.S. stock investors to gain exposure to Ethereum assets, unless they directly purchase Ethereum or Ethereum ETFs. For institutional investors, this is a major theme. They won’t simply say, "Okay, Ethereum is the largest trade within my $50 billion fund." Instead, they’re more likely to ask, "How can I directly gain exposure to Ethereum assets?"

Currently, they can’t buy Ethereum ETFs because it doesn’t fit within their fund’s investment parameters. Therefore, for professional investors in the U.S. stock market, Ethereum reserve companies are the only way to access Ethereum assets.

This is also why investors like Cathie Wood have made significant investments in Bitmine. Bill Miller also announced last week that he has made a major investment in Bitmine. These institutional investors are veterans in the crypto space, and they recognize this as the best way to gain macro exposure to Ethereum.

Accumulating More ETH

David:

What is your strategy for accumulating ETH? Beyond leveraging MNAV premiums to increase assets on your balance sheet, are there other methods you use to acquire Ethereum? Assuming MNAV premiums are not considered, how do you add Ethereum to your balance sheet?

Tom Lee:

That’s a great question, and I have several answers, though some strategies are proprietary and cannot be disclosed in detail. However, I believe investors shouldn’t oversimplify their understanding of reserve companies.

We’ve become the third-largest crypto reserve company globally, trailing only Mara Blockchain and MicroStrategy. Our crypto asset holdings even surpass Meta Planet. The significant differences in scale and liquidity allow us to employ diversified strategies rather than relying solely on a single approach, which is a key distinction between us and other companies.

Ryan:

Why does the MNAV premium exist? Can you elaborate on this? I’ve heard some investors say the MNAV premium should typically hover around 1, perhaps slightly above 1. In bear markets, it might fall below 1. So why do crypto reserve companies have an MNAV premium?

Tom Lee:

I can explain this from both numerical and non-numerical perspectives. Bitmine’s cost structure is extremely tight.

Suppose we hold $3 billion worth of Ethereum. You might say this is just an ETF (Exchange-Traded Fund). Let’s assume we invest at 1x Net Asset Value (NAV), and Ethereum itself has a 3% yield. If we distribute this yield as net income to investors, we can assign it a money market multiple, say 5%. In this way, the yield is amplified to 20x. This means a 3% yield could add 0.6 to NAV value.

Beyond that, two key factors influence valuation.

The first is growth rate. When we launched our Ethereum strategy on July 8, the per-share value of Ethereum was only $4. By July 27, the per-share value had grown to $23, and now it’s even higher. While we have yet to disclose the latest figures, it has indeed increased. Over approximately 20 days, the per-share value of Ethereum grew by $19.

This illustrates growth rate. When calculating NAV, this must be considered, as NAV is continuously increasing. We need to assign a multiple to this growth rate. For instance, MicroStrategy earns a 1.7x premium for adding $0.16 worth of Bitcoin daily, while our growth rate is 12 times faster.

Theoretically, our premium should be higher. Using MicroStrategy’s premium of 0.6 as a baseline, our speed being 12x faster theoretically suggests a premium of 7.2x. Of course, this is theoretical, but it’s worth pondering.

This is just the impact of growth rate. The other factor is liquidity. For example, MicroStrategy’s daily trading volume is around $3 billion, while we are the second-largest crypto asset reserve company with a daily trading volume of $1.6 billion.

In contrast, Meta Planet’s daily trading volume is only $50 million. Our significant liquidity advantage should also warrant a premium.

Thus, Bitmine’s valuation can start at 1x NAV, add a yield premium of 0.6, totaling 1.6. Next comes the growth rate premium. We know MicroStrategy earns a 0.6x premium for adding $0.13 worth of Bitcoin daily, while our rate is 12x faster. Finally, there’s the liquidity premium, as liquidity determines our ability to issue other financial instruments at lower costs.

Ryan:

Yes, the liquidity premium comes from being the largest, strongest, and deepest player in the market. The growth rate premium is also fascinating. Let’s delve deeper into this, as your growth rate in the first month was 12x MicroStrategy’s.

The question is, can this pace be sustained over the next 11 months or the entire year? Let’s talk about that. How are you achieving this Ethereum growth rate? Can this level truly be maintained?

Tom Lee:

This is essentially a reflection of liquidity functionality. Liquidity and growth rate are two sides of the same coin. Our high growth rate is achievable because of our liquidity advantage. Let me give an example. As of 2 p.m. today, our trading volume has already reached $800 million.

MicroStrategy’s trading volume is $3 billion. In comparison, Ether Machine, the third-largest Ethereum holder, has a trading volume of only $7 million today. Our trading volume is 100 times that of Ether Machine.

Meanwhile, Bit BTBT, the fourth-largest holder, has a trading volume of $49 million today. You can see the vast differences in liquidity, which directly impact growth rate. To achieve high growth rates, assets must have extremely high liquidity.

Ryan:

I have another question about growth rate. Since you say growth rate depends on liquidity, where does this liquidity come from? How do you acquire more liquidity?

Tom Lee:

That’s an excellent question. I think liquidity primarily stems from team collaboration and resource integration.

First, as the director leading this project, Bitmine’s private investors include Mosaics, a highly renowned and experienced macro hedge fund. Their involvement has helped us attract heavyweight investors like Founders Fund and Stan Drucker Miller. Notably, Stan Drucker Miller has been disclosed as a holder in our registration statement.

Additionally, Arcs and Bill Miller—names that carry significant weight in traditional finance and venture capital—are also supporters. Their backing reflects trust and recognition of our vision.

Second, I’ve always been a staunch advocate for cryptocurrency and its integration with traditional finance. Back in 2017, we clearly stated that Wall Street would gradually pay attention to Bitcoin. Starting that year, Bitcoin truly became an asset of interest to institutional investors, and its market ownership gradually expanded.

Now, Ethereum is experiencing a similar "2017 moment," gaining favor among institutions and investors. I believe this trend is logical and helps drive the goals of Ethereum reserve companies.

Of course, I also strongly support projects like SharpLink and Andrew Keys, as we all work toward a common goal. By staking Ethereum, we enhance its security, making it a reliable U.S. blockchain. In essence, we are all collaborating toward the same vision, collectively advancing the cryptocurrency ecosystem.

Ethereum’s Breakout Moment

Ryan:

Tom, many listeners started getting involved in crypto only after 2017. I’m not one of them. I remember seeing you on CNBC in 2017—you were the only person in a suit talking about Bitcoin on traditional financial media.

Your way of articulating resonated with many in the crypto space. Can you revisit the “2017 moment” you mentioned for Ethereum? You’re comparing it to Bitcoin’s 2017 and discussing its changing perception on Wall Street.

Help us connect the dots. What was Bitcoin like in 2017, and how does Ethereum today resemble it?

Tom Lee:

In 2017, Fundstrat was a company focused on macro trends and thematic research. We began conducting studies that eventually led us to Bitcoin. At the time, we carried out two significant pieces of research.

One was a study on millennials. At the time, the oldest millennials were about 25 years old. We realized they would become a driving force in the U.S. economy. While this is widely accepted today, it was a novel idea a few years ago.

Our research was so in-depth that we eventually collaborated with Snapchat to write several white papers exploring how millennials could be monetized. At the time, Snapchat was trying to convince advertisers to target Gen Z and millennials, while many traditional brands like Pepsi still believed advertising should focus on Gen X. This might sound odd now, but that’s how it was back then.

The second study drew our attention to Bitcoin’s price trajectory. When I worked at JPMorgan, Bitcoin’s price was $100. After leaving JPMorgan, I saw it rise to $1,000, reaching a market cap of $100 billion. I had never seen an asset achieve such scale without any backing. So we spent months delving into Bitcoin.

While I didn’t fully understand all its intricacies, we found that its price growth was primarily driven by two factors: the growth in wallet numbers and transaction activity per wallet.

This is essentially the network value effect—the more users, the exponentially higher the network value. We predicted that by 2022, Bitcoin’s price could reach $25,000, and if it captured 5% to 10% of gold’s market value, it could even hit $100,000. So we started sharing this narrative with the market.

We believed Wall Street needed to understand Bitcoin because it was “digital gold.” Indeed, we were the first company to introduce Bitcoin to institutional markets.

At the time, 0% of institutional investors held Bitcoin; 100% were retail investors. Over the past eight years, Bitcoin’s primary narrative has been its value storage function as “digital gold.” While it’s also a payment system, its real appeal lies in its value storage capability.

Our research showed that gold was primarily held by baby boomers, while millennials would choose Bitcoin as their gold. This was a cross-generational story and a narrative of digital replacement.

That’s the context. At the time, I conducted many webinars at Fundstrat, but we lost some institutional clients because they thought our views were too radical. They questioned why we would recommend an asset widely regarded as only used for drug transactions and the dark web, calling it a legitimate asset class. Our reputation took a hit because of this.

But as you know, Bitcoin’s price later reached $120,000. We advised clients to allocate 1% to 2% of their portfolios to Bitcoin, which has brought some clients returns as high as 120x.

That made many clients become extremely aggressive. I think Ethereum today is in a similar situation to Bitcoin back then. While Ethereum is sometimes considered a dormant chain, its stability is remarkable—no downtime in ten years. This is crucial for Wall Street, which has decided Ethereum is the foundational chain for their future development.

David:

A lot has happened over the past six months. Circle’s IPO performed well, Coinbase’s stock is doing great, and Robinhood announced its upcoming Ethereum Layer 2 initiative. Additionally, the term “tokenization” is spreading rapidly. Many things are happening, and they’re all supported by Ethereum.

Circle’s USDC was born and grew on Ethereum, Coinbase—the world’s largest publicly traded crypto company—is building Ethereum’s Layer 2, and Robinhood—a traditional financial company—is also building Layer 2. While Robinhood isn’t a crypto company, it’s entering the crypto space by legitimizing these technologies.

Does Wall Street understand that Ethereum is the backbone of many current movements? Do you think this is why there’s such strong momentum behind these reserve companies? Or am I just crafting this narrative myself?

Tom Lee:

David, your description is very logical. But Wall Street usually only connects these dots when there’s money to be made. Let me give an example: many listeners might hold stocks like Apple, Amazon, or Nvidia. Nvidia is a textbook case of exponential growth, but it also had years where its performance was nearly flat and even considered “dead money.” A few years later, the market suddenly realized its value and repriced it.

Ethereum is currently undergoing a similar phase. On-chain activity has reached historic highs, and the community has been revitalized due to price recovery. More and more people are using Ethereum, and the functionality of smart contract blockchains gives it an advantage over Bitcoin, which cannot support stablecoins.

I think Ethereum’s current price not reaching $15,000 isn’t a bad sign. We’ve recommended Tesla and Nvidia before, and their growth wasn’t directly tied to revenue but showed significant leaps in stages.

I hope Ethereum’s price remains relatively low in the coming years so we can acquire it at more attractive prices. If its price reaches $17,000, it might become too expensive for Ethereum reserve companies. Of course, this would boost their stock prices, but for me, that would still be a positive outcome.

Ethereum's Potential for 100x Growth

Ryan:

Similar to 2017, Wall Street didn’t fully understand Bitcoin back then. You’ve mentioned that by 2025, Wall Street might still not completely grasp Ethereum as an asset. They may begin to recognize its value, but this feels very reminiscent of Bitcoin’s early development pattern.

I recall in 2017, when you spoke about Bitcoin on traditional financial programs, its price was around $2,000 to $3,000. At the time, you made bold predictions on shows like Squawk Box, suggesting Bitcoin would reach $20,000 or even $40,000. Many thought those predictions were overly aggressive, but history proved you right.

Now Ethereum’s price is at a similar level, roughly $3,000. You’ve also made high-price forecasts for Ethereum’s future, which have similarly caused a stir in traditional finance circles. Do you think Ethereum can achieve a growth trajectory similar to Bitcoin’s? What are your price expectations for Ethereum?

Tom Lee:

I believe Ethereum’s upside potential might even surpass Bitcoin’s because it faces greater skepticism. While Bitcoin wasn’t widely accepted early on, people didn’t actively short it—they simply chose not to believe in it.

In 2017, we predicted Bitcoin would reach $100,000, and while that seemed crazy at the time, it didn’t take long from 2017 to now for that growth to materialize. Bitcoin achieved 100x growth within our lifetime. Ethereum’s current situation is very similar to Bitcoin’s in 2017. Wall Street remains skeptical about whether Ethereum can survive long-term, partly due to its shift to Proof of Stake and its previously high circulation.

However, these issues are gradually being resolved. Wall Street’s doubts about Ethereum primarily center on whether it can truly benefit as a Layer 1 blockchain rather than merely serving as a support platform for Layer 2 solutions. I believe this perspective will eventually be overturned, and when it does, it will trigger exponential growth. Thus, I think Ethereum’s potential could even exceed Bitcoin’s 100x growth.

If Bitcoin’s price reaches $1 million, Ethereum’s potential will be even more astonishing. Ethereum is not only part of Wall Street’s financialization of blockchain but also a critical component of the U.S.’s AI dominance strategy.

If MicroStrategy’s Bitcoin price triples, Ethereum reserve companies could also achieve threefold growth. Therefore, I believe Ethereum reserve companies represent an excellent investment category. Bitmine’s unique strategies position it at the forefront of this sector, and Ethereum itself remains significantly undervalued.

Ryan:

Your prediction might shock some people—Ethereum achieving 100x growth would mean a total market cap of roughly $40 trillion. Moreover, you’ve mentioned that Ethereum could surpass Bitcoin in network value, which isn’t a widely accepted view in the crypto community, though many Ethereum supporters have long believed this.

In the shorter term, how do you see Ethereum’s price evolving? For example, by the end of this year or the end of the next cycle, what levels might it reach?

Tom Lee:

In the short term, I think Ethereum’s price should at least return to $4,000 because today’s Ethereum narrative is stronger than it was last December when its price was $4,000.

In fact, Ethereum is performing better today than it did a year ago. A year ago, Ethereum’s price ratio to Bitcoin was 0.05, corresponding to roughly $6,000. So from a narrative perspective, Ethereum should at least reach this level.

Additionally, by the end of this year, with other Ethereum reserve companies beginning to accumulate Ethereum and Bitcoin’s price rising, I think Ethereum reaching $7,000, or even $12,000 to $15,000, is reasonable.

By 2026, the Federal Reserve will begin implementing dual shifts, and central bank liquidity will rise, further driving Ethereum’s price growth. I’m not sure if crypto follows clear cycles, but if it does, this would favor Ethereum. Personally, I think Ethereum reserve companies would prefer Ethereum to remain stable over the next five years and then experience significant growth. However, this might happen suddenly in a stepwise manner.

For example, when I predicted S&P 500 earnings in 2009, the market had fallen nearly 80%, but by 2010, S&P 500 earnings had recovered to $60. Today, S&P 500 earnings stand at $300, demonstrating exponential growth in traditional markets. Similarly, crypto’s network value could reach $20 trillion.

We’re witnessing growth similar to what we’ve seen in stock markets. Additionally, the valuation of crypto reserve companies is primarily based on their balance sheet assets rather than profitability. Similar to Exxon Mobil, these companies have historically been valued based on reserves rather than earnings. Crypto reserve companies are becoming the new Exxon.

Methods for Estimating ETH's Value

David:

Tom, you’ve mentioned attempts to model cryptocurrency valuations, but we also recognize that these assets are inherently difficult to predict accurately using traditional models.

Today, many companies like Coinbase, Robinhood, and Circle are building applications on Ethereum, Layer 2 solutions rely on Ethereum, and tokenization technologies are also based on Ethereum. I think these narratives significantly impact Ethereum’s value and price.

When analyzing these prices, how do you break them down? Do you see Ethereum’s price as a reflection of transaction fee demand? Or do you consider its role as a store of value in DeFi applications, or the impact of staking demand? How do you specifically analyze Ethereum’s value and price?

Tom Lee:

I might ask this question: David, have you ever seen anyone accurately predict Bitcoin’s price using a spreadsheet model? In reality, no one has succeeded. I don’t think anyone can.

Even if someone succeeds, their models won’t account for all changes a year later. Therefore, I think those trying to predict Ethereum’s price using spreadsheet models are making the same mistakes as those using earnings models or ISM indices to forecast the S&P 500 index.

This is also why no one can accurately predict the S&P 500 index. When I first started working on Wall Street, I learned a key lesson: valuation models focus too much on earnings (E) while neglecting the importance of the price-to-earnings ratio (PE). Many people spend too much time trying to model earnings data, but what often drives prices is the PE ratio. Ethereum’s price won’t be determined by one week’s transaction data but by the market’s recognition of its value five years from now.

Therefore, I think relying too heavily on models and claiming to predict a specific price is misguided. My view of the stock market is similar, whether it’s Palantir or Tesla valuations. Fundstrat has consistently made correct calls on these trades because we haven’t been constrained by traditional models.

Ryan:

How do you estimate market size, then? Do you compare Ethereum to other assets?

For example, in 2017, you compared Bitcoin to digital gold, with gold’s total value being around $20 trillion. Do you compare Ethereum to digital oil and discuss its value ceiling in that context?

Tom Lee:

That’s just one part of valuation. I’ve indeed seen reports comparing Ethereum to digital oil, and those analyses are quite compelling. I’m sure you’ve seen similar studies. For example, the Mosaic team once built two models for Ethereum: one based on banking system proxies and another based on payment system proxies.

But ultimately, if I’ve learned anything from the stock market, it’s that you can’t be constrained by rigid frameworks. Many people try to limit predictions within standardized models, like SOPs (Standard Operating Procedures).

For instance, when the S&P fell in April, many assumed reduced earnings would lead to further declines in the index, while my team was the only strategist not lowering annual forecasts. It turned out the market then experienced a V-shaped rebound. This phenomenon can’t be predicted through spreadsheet models, but it reflects the market’s resilience and operation.

I’m not against building frameworks, but I think Ethereum’s current price of $3,600 is clearly undervalued. Perhaps that’s the most important conclusion, rather than trying to predict its price five years from now using spreadsheets. I know this might sound like I’m not giving a specific answer, but I believe this is actually the best answer.

Strategies for Managing Market Risks

Ryan:

Tom, do you think crypto reserve companies, such as those holding Bitcoin, Ethereum, and other assets, could become overheated at some point? Perhaps this ties into the PTSD many of us in the crypto space have experienced, given events like GBDC trading and the collapse of O Capital, which impacted other markets as well.

We’re observing these reserve companies and new entrants entering the market with Market Net Asset Value (MNAV) premiums, with some even comparing them to the investment trusts of the 1920s. Of course, we all know how the stock market bubble of the 1920s burst.

Do you think these reserve companies could enter a bubble phase? For instance, could prices rise excessively, premiums reflexively increase, and then suddenly crash like an elevator, losing all value and even triggering systemic risks for crypto and broader markets? Are you concerned about this?

Tom Lee:

There’s definitely a lot to discuss here. First, let’s look at the liquidity in the stock market.

The current stock market rebound has been called “the most hated V-shaped recovery.” During video calls with institutional clients, I often hear their perspective on why the stock market shouldn’t be rising and why current valuations are too high.

However, after each meeting, I become even more convinced that the stock market has valid reasons to continue rising, precisely because such views are not the mainstream consensus. In markets, skepticism often drives price increases. If listeners are optimistic about the market, but the market isn’t rising and everyone is bullish, that might indicate a bubble.

The only scenario where crypto reserve companies could face issues is if they use leverage. I believe any company employing complex tools or debt structures, especially if their resources aren’t scarce, could be at risk.

Companies like MicroStrategy and Meta Planet succeed because they’ve reshaped the industry landscape. Those failing to innovate might face challenges. However, from my observations, most crypto reserve companies use relatively simple structures.

If these companies encounter problems, the outcome might simply be a drop in prices. I don’t think this would trigger a stock market crash, as such crashes are typically caused by debt issues or external shocks. I believe we’re far from a bubble right now.

In fact, the market is betting on these assets being oversupplied, meaning their value only rises when Bitcoin prices increase.

Of course, at some point, the market could enter a bubble phase. But I’ve noticed that people always declare bubbles in the mid-to-late stages of a market, while the actual peak usually occurs when no one is bearish. Currently, everyone is bearish on Bitcoin and the stock market because of recent market performance.

If we were truly at the market’s peak, consecutive days of bearish trading wouldn’t cause so much concern. But the fact is, everyone is saying this is the market’s peak.

When market confidence is very fragile, it’s often still far from the true peak. Keep that in mind.

Ryan:

Tom, what’s your view on the current macroeconomic situation? Macro events, such as tariffs or recessions, could impact the crypto market. I remember interviewing you last August when yen arbitrage suddenly disappeared.

You predicted that situation would resolve itself, and you were correct. So what’s your macroeconomic outlook now? Is there anything that worries you, or do you think we’re in a good spot?

Tom Lee:

I’m very concerned about institutions becoming politicized. For example, the Federal Reserve and the Bureau of Labor Statistics (BLS) should be independent, yet some of the BLS’s data revisions seem quite odd. However, I don’t believe these revisions are the result of politicization.

From my perspective, the economy is performing very strongly right now. When I talk to clients, many institutional investors believe we’re experiencing a recession. Some might say, “Tom, if everyone thinks we’re in a recession, then you must be wrong because you can’t claim the economy is strong.”

But in my 30 years of experience, no one has accurately predicted recessions. When everyone believes we’re in a recession, it usually isn’t one. True recessions often occur when the business environment changes suddenly, catching everyone off guard.

For example, the housing bubble burst, but when everyone is extremely cautious, bubbles don’t burst. The ISM index has been below 50 for 29 consecutive months, indicating extreme caution in the corporate world. If this truly were a recession, it would be the first time in history a recession occurred without the ISM index breaking above 50.

This might sound strange, but based on my observations, we’re currently in the mid or even early stages of the economic cycle. Tariffs were once a recession factor, while rate shocks reset confidence in the business sector. This fear has actually helped us avoid a recession by prompting companies to cut spending.

If you look at the data, corporate earnings are performing well, and no one is seeing demand collapse. That’s because everyone is being cautious.

Wall Street’s Misunderstanding of Crypto

David:

Tom, I imagine your phone is ringing off the hook with calls from Wall Street billionaires trying to understand Ethereum and learn more. What do you think are the biggest misconceptions Wall Street has about crypto, especially Ethereum?

Tom Lee:

That’s a great question, thank you for asking, David. Wall Street loves analyzing things through spreadsheets, so every phone call starts with questions like, “Tom, can you provide me with a model explaining how stablecoin usage impacts gas fees?” Then they’ll ask, “What’s the trading volume of stablecoins? How much of that is related to Ethereum? How much is on Layer 2? What about payment scenarios?” I think this is the problem.

When people rely too heavily on spreadsheets, they often suffer from analysis paralysis and fail to see the bigger picture.

In reality, Ethereum is a legally compliant blockchain, which is incredibly important. But this isn’t unique to Ethereum; similar issues arise in S&P 500 analysis. For instance, someone might say, “The S&P 500’s long-term median P/E ratio is 16x, and current profit margins are at historical highs, so margins will decline, and the index could fall to 3,000 points.” But in practice, this type of analysis has never really yielded profits.

I suggest people review how these perspectives have performed over the past 50 years, and they’ll find this kind of analysis has never made money.

David:

My analysis is that those who come to you with spreadsheets are essentially doing basic “cover work.” They need to justify to their bosses—and their bosses’ bosses—why they’re buying large amounts of Ethereum or other assets.

They need to accomplish this task by creating spreadsheets. So how can we offer them a different way to “cover” themselves?

Tom Lee:

That’s a great question. At Fundstrat, we conduct evidence-based research but aren’t constrained by assumptions. For example, unemployment rate data isn’t a legal rule, the federal funds rate isn’t a legal rule, and the 10-year Treasury yield isn’t either. These metrics have never been equilibrium points.

Take Fundstrat’s ETF, Granny Shots, for example. While it’s only eight months old, Granny Shots has delivered a 17% return year-to-date, compared to the S&P 500’s 7% gain.

We’ve outperformed the S&P 500 by 1,000 basis points. Morningstar ranks us in the top 30 out of 1,400 funds, placing us in the top 2% of large-cap stock funds. We use an evidence-based approach but aren’t limited by traditional earnings forecasts. Our stock selection is highly disciplined.

If someone asks me about Ethereum reserve companies, I wouldn’t specifically discuss Bitmine. You should start with Ethereum’s per-share health and then consider four factors: velocity, liquidity, scarcity, and uniqueness. The largest companies clearly deserve a premium due to network effects. Then you should ask yourself, what is Ethereum’s price? What are its potential risks and rewards?

If someone tries to calculate Ethereum’s price down to the penny or even $100, their analysis will never work because Ethereum has never been an equilibrium point.

But you should ask yourself, if Ethereum’s price reaches $3,700, what are the risks? What’s the lowest price? For example, this year’s low was $1,700. And what’s the potential reward? You can refer to Bitcoin’s price five years ago, which might suggest Ethereum reaching $20,800. This way, you can see the asymmetry of risks and rewards.

You can derive price based on Ethereum’s per-share health, combined with velocity, liquidity, and scarcity. This isn’t calculated through spreadsheets but is based on real-world conditions.

If Ethereum’s price reaches $20,000, how much will these companies be worth? If the price drops to $1,700, it might halve. But if Ethereum’s per-share health doubles during the same period, the stock price might remain unchanged. Therefore, companies with better liquidity are the best choice because they can increase your Ethereum holdings.

Summary and Outlook on Ethereum

David:

Tom, do you own other Ethereum-related assets? For example, NFTs (non-fungible tokens)? What’s your general view on NFTs?

Tom Lee:

I do own quite a few Pudgy Penguins merchandise items. These things are very fun, and I shared their designs last week. However, it’s hard to keep these items in my office because almost everyone wants one.

David:

So are Pudgy Penguins your favorite Ethereum NFT?

Tom Lee:

You could say that. I find Pudgy Penguins’ uniqueness very appealing, and they’re extremely popular in South Korea. South Korea not only has a rich stock market culture but is also one of the most actively traded stock markets in the world. I worked in South Korea for a while and discovered its crypto culture is also very advanced. Therefore, Pudgy Penguins’ popularity in South Korea further underscores their value.