"Wall Street Oracle" Tom Lee transforms into a major bull for ETH. Why does he firmly believe in Ethereum and its treasury strategy?

Author: Weilin, PANews

On Wall Street, Tom Lee is known as the "Wall Street Oracle," gaining widespread attention for his accurate market predictions and deep insights into assets like tech stocks and Bitcoin. As the founder of the analysis firm Fundstrat, he is a well-known analyst in traditional markets and a staunch supporter of digital assets such as Bitcoin and Ethereum.

Recently, Lee was appointed as the chairman of the board for mining company Bitmine and is involved in the company's $250 million Ethereum treasury strategy, which has attracted significant market attention. In a recent interview, Tom Lee boldly predicted that Ethereum would rise to $10,000 during the current market cycle.

Bitmine Announces $250 Million Ethereum Treasury Strategy, Appoints Tom Lee as Chairman

Mining company Bitmine Immersion Technologies (BMNR) recently announced a $250 million private placement plan aimed at funding its Ethereum treasury strategy, similar to MicroStrategy's Bitcoin treasury strategy.

On July 3, Bitmine's stock surged over 1,000%, sparking heated discussions and speculation among investors. The fundraising was led by MOZAYYX and supported by several active institutions in the crypto investment space, including Founders Fund, Galaxy Digital, Kraken, Pantera, Republic Digital, and DCG.

At the same time, Bitmine announced the appointment of Tom Lee as chairman of the board. Lee is the founder of Fundstrat and a well-known strategist who has long been optimistic about cryptocurrencies. His early conviction in Bitcoin and tech stocks has earned him a loyal following on Wall Street.

Although the stock price surge has drawn widespread attention, it has also come with warnings. Some analysts point out that while crypto treasury strategies are powerful narrative drivers, they also bring new volatility risks. Bitmine's future will be closely tied to Ethereum's performance, and sentiment in this area can change rapidly. For investors optimistic about Ethereum's long-term applications, direct investment may be a simpler and less volatile option.

Tom Lee: "Stablecoins Will Cause Ethereum's Transaction Fees to Grow Exponentially"

In a recent interview, Tom Lee stated that he likes Ethereum because it is a programmable smart contract blockchain, and the rise of stablecoins supports Ethereum. He mentioned Circle, a recently popular stablecoin company valued at $9 billion. "Circle is like the best IPO in five years, and its trading market cap is 100 times EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization, a financial metric used to measure a company's profitability before interest, taxes, depreciation, and amortization). This has brought very good performance to some funds, helping them enter the top 1%. So from a traditional Wall Street perspective, Circle is like a god-tier stock, and stablecoins are like ChatGPT in the crypto space because they have broken into the mainstream market," he said.

Lee pointed out that this indeed proves that Wall Street is trying to give tokenized assets the attributes of stocks, while the crypto world is tokenizing stocks by tokenizing dollars. People are now seeing that JPMorgan wants to launch its own stablecoin, and Amazon, Walmart, and Goldman Sachs are also paying attention. Stablecoins are a very good business model, and they are very effective for consumers and merchants. But they all have to operate on the blockchain, and most stablecoin transactions occur on Ethereum.

"Ethereum was once overlooked. Currently, the total size of the stablecoin market is only $250 billion, which accounts for 30% of Ethereum's transaction fees, and Ethereum generates over 50% of stablecoins each year. Treasury Secretary Scott is very fond of stablecoins. He believes this will be a $2 trillion market, which means a tenfold increase. The U.S. government wants more stablecoins because stablecoins collectively have become the 12th largest holder of U.S. Treasury bonds. If the creation of stablecoins increases tenfold, this will lead to an exponential growth in Ethereum's transaction fees," Lee said.

Lee further pointed out that he believes Ethereum is the direct beneficiary of Wall Street's attempts to give cryptocurrencies stock-like attributes.

What Advantages Does the Treasury Strategy Have Over Simply Buying Ethereum?

Regarding the "Tom Lee effect" on BMNR stock's rise, Lee stated, "If I want to invest in Ethereum, why not just buy an ETF? Or why not buy it directly on-chain and hand it over to a custodian? But in reality, treasury companies have five very important aspects."

"If people buy an ETF or purchase Ethereum on-chain, the units of Ethereum you hold will be fixed, meaning that if you buy an ETF, there will be a portion of contract-based Ethereum, which may shrink due to fees. But these treasury companies aim to increase the number of tokens per share; MicroStrategy's benchmark is this key performance indicator. So the first point is that if its trading price is higher than the net asset value (NAV), they can issue shares and create more net asset value per share, which is what they call reflective growth. I think there are very few things in the stock market that grow reflectively like this."

He stated that the second reason is that the underlying tokens are very volatile; in fact, Ethereum's volatility is twice that of Bitcoin. If people hold an Ethereum ETF and want to leverage buy more Ethereum ETFs, banks can charge a 10% fee. But if you are in a treasury asset company, the cost of funds is lower. However, you can sell volatility through convertible bonds or derivatives. Moreover, in the case of MicroStrategy, the capital cost is zero, so you can now pull two leverages.

He further mentioned that the third leverage is the gap between market price and net asset value. Investors have equity, and other treasury companies are also trading at net asset prices. So if something is trading at net asset value, and you trade at three times the price, you can engage in mergers and acquisitions to buy other treasury companies. So, in fact, this is like arbitrage.

The fourth point is that you can create an operating company. For example, we can create a business that helps the DeFi ecosystem by providing Ethereum staking loans. This is not common in Bitcoin, but in Ethereum, this is a huge benefit.

The fifth point is that you can create what I call structured put options. For example, MicroStrategy has 600,000 Bitcoins. If the U.S. government wants to buy 1 million Bitcoins, or if the UAE or the UK also wants to buy 1 million Bitcoins, someone might say, I can buy MicroStrategy because the U.S. government already owns 600,000 Bitcoins. So, I pay a 200% premium, which is cheaper than paying $1 million to buy Bitcoins. This is what is called a sovereign put option.

But in the Ethereum world, because it is a staking token, if these treasury asset companies own 5% of Ethereum, they become very important to the ecosystem. So their market value should rise; if Goldman Sachs launches a dollar token that operates on Ethereum, they will ensure the security of the Ethereum network. So ultimately, they will buy a large amount of Ethereum. But these staking entities already own it. So, perhaps they will only buy the rights of the staking entities. Therefore, the staking entities hold Wall Street's put options, which is a very logical way of thinking.

Early Experience: Wall Street's First Major Strategist to Provide Formal Bitcoin Research for Clients

Looking back at Tom Lee's personal experience, his original name is Thomas Jong Lee. His parents are Korean immigrants, and Lee earned a bachelor's degree in economics from the Wharton School of the University of Pennsylvania, majoring in finance and accounting. He is also a CFA charterholder and an active member of the New York CFA Society and the New York Economic Club.

Lee's career began in the early 1990s, working at Kidder, Peabody & Company and Salomon Smith Barney. In 1999, he joined JPMorgan Chase & Co as the chief equity strategist. During his time at JPMorgan, Lee's research attracted criticism, particularly in 2002 when the publicly traded company Nextel openly criticized his research, drawing national media attention. This dispute made headlines in The Wall Street Journal. In 2014, Lee left JPMorgan to found his own research consulting firm, Fundstrat Global Advisors, where he became the head of research and also served as an advisor to NewEdge Wealth, a wealth management firm in Connecticut.

Lee is the first major strategist on Wall Street to provide formal Bitcoin research for clients, which garnered significant media attention at the time. Lee is known for his deep insights into the market and accurate long-term predictions. His analyses include predictions for the S&P 500 index, views on market rebounds, and comments on specific stocks like MicroStrategy and Tesla. Additionally, Lee has discussed the impact of inflation and Federal Reserve policies on the market.

Recently, he predicted that the S&P 500 index would rise by 10% by 2025 and believes that the current market rebound, while positive, has not yet gained the trust of most investors. Despite being criticized for his optimistic market outlook, his supporters highly praise his institutional-level perspective and deep understanding of market trends.