Tom Lee of Fundstrat is known as a perma bull, meaning he consistently remains bullish on the market. However, despite what some might perceive as a somewhat biased opinion, Lee has largely been right the past couple of years, nailing bullish calls in 2023 and 2024, often when other market strategists were bearish.
Lee has also been quite bullish on cryptocurrencies, particularly with regard to Bitcoin and Ethereum (ETH +3.50%). Lee even became the board chairmano of a company called Bitmine Immersion Technologies, which employs an Ethereum treasury strategy, using capital to buy and hold the crypto. Lee is extremely bullish on Ethereum, a token he believes can surge by as much as 2,000%.
A settlement layer of the global economy
The two dominant cryptocurrencies, Bitcoin and Ethereum, are actually quite different from each other. In recent years, Ethereum has transitioned away from Bitcoin's proof-of-work (PoW) consensus mechanism and adopted proof of stake (PoS), which is significantly more energy-efficient. PoS involves having investors stake or lock up their coins for the opportunity to validate transactions, mint new blocks, and collect more coins as a reward in the process.
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Ethereum also has smart contract functionality, enabling developers to build decentralized finance (DeFi) applications on the network, with a wide range of use cases, including the tokenization of assets to the issuance of stablecoins. And this is why Lee is so bullish on Ethereum and has chosen to join Bitmine, a company stockpiling the token. At a conference earlier this month, Lee said he believes Ethereum will start to close the gap with Bitcoin and return to its historical range.
Ethereum has remained range-bound for five years but has now begun to break out. ... If Ethereum returns to its eight-year average ratio against Bitcoin, that's $12,000. But if it gets to 0.25 relative to Bitcoin, that's $62,000."
Ethereum's highest-ever ratio against Bitcoin was about 0.12, which occurred in 2017. However, the average since then has been about 0.05. But Bitcoin has clearly benefited from the digital gold narrative and the surge in the price of gold, which is why it has broken away from Ethereum.
CRYPTO: ETH
Key Data Points
However, Lee believes Ethereum can not only retake its average against Bitcoin, but also do much better and reach 0.25, due to his view that Ethereum's network will become the foundation of worldwide financial settlement. The majority of stablecoins are already issued on Ethereum, which has the majority of DeFi apps on it as well.
Ethereum is, of course, not without competition. Other cryptos operate on PoS or an even more efficient network that can process a higher volume of transactions per second, and also offer developers a place to build DeFi applications. However, Ethereum being the first does give it a first-mover advantage.
Can Ethereum really break out?
Although Lee is obviously a very intelligent market strategist, I caution investors from reading too much into specific crypto price predictions. That's because cryptocurrencies are simply too volatile, and they can't be valued like traditional stocks because they don't generate earnings and free cash flow. Crypto is still also a fairly new sector, so there is likely still a lot to learn about it.
Currently, I think the best thing investors interested in crypto can do is find coins that trade on networks with real-world utility, and Ethereum definitely fits the bill, whether it's due to stablecoin issuance, smart-contract functionality, or DeFi activity. The network has achieved critical mass, despite competition from other networks that are also strong from a technical perspective. That's why I think investors can certainly buy Ethereum and hold it long-term.
