Tom Lee discusses how sovereign institutions reshape the crypto cycle, with stablecoins and AI narratives boosting Ethereum

Author|MarioNawfal
Compiled by|Aki Wu on Blockchain

This interview with Tom Lee, co-founder of Fundstrat, discusses topics such as whether the "cycle has changed" in the crypto market, the role of macro liquidity and new narratives, the impact of stablecoins on U.S. Treasuries and the settlement system, the fundamentals and valuation logic of Ethereum, and the DAT treasury company. Tom Lee believes that Bitcoin and Ethereum are transitioning from a retail-driven pricing framework to a structure dominated by institutions and sovereign funds, which may weaken the traditional "four-year cycle"; if stablecoins grow to about $4 trillion in assets, they will support long-term demand for U.S. Treasuries, while the Ethereum ecosystem possesses native yield, compliance, governance influence, and the advantage of "per-share crypto asset growth rate."

Why did you leave JPMorgan and the early resistance?

Mario: My first question is: how would you describe the industry when you first encountered cryptocurrencies? And how has it changed today? What is different about the entire industry now? What is the landscape of Bitcoin compared to other tokens?

Tom Lee: I started writing about crypto-related content and publicly advocating for Bitcoin (and Ethereum) in 2017. At that time, we advised clients to allocate either 1%--2% in Bitcoin or 1% each in Bitcoin and Ethereum. In our view, the core argument in 2017 was that Bitcoin would be seen as "digital gold."

We had a very intuitive explanatory framework: about 97% of Bitcoin's price could be explained by the number of wallets and on-chain activity; and Wall Street's adoption path would revolve around the narrative of "digital gold." For a while, institutional investors remained skeptical about crypto assets until recently when the situation improved significantly. You know, especially in the U.S., regulators and policymakers have been quite unfriendly towards Bitcoin and crypto assets until this year. So I would say that although it has only been a few short years, it feels like we have experienced thirty years.

Wahid Chammas: I remember it very clearly. At that time, I was a portfolio manager at Janus, just leaving to start my own private equity firm. It was a time when many strategists were leaving big banks to start their own ventures. I remember you had also left JPMorgan by then. You were always making very bold judgments at JPMorgan, never sitting on the fence, and not afraid to go against the consensus.

Especially in 2017, you made an extremely bold and innovative "white paper-like" assertion. I was thinking: did he have to leave JPMorgan to write such a bold piece of research? My colleagues generally did not accept this view, and I think many people on Wall Street did not either. Everyone was thinking: he left to start his own business, and to maintain relevance, he had to choose a "niche" topic. But that was not the case. So I want to ask: did you have to leave JPMorgan to have that kind of intellectual freedom to see these trends?

Tom Lee: In fact, during my time as Chief Strategist at JPMorgan, we had discussed Bitcoin multiple times in our macro meetings, and I remember this very clearly. Our forex strategist mentioned that Bitcoin might be recognized as a digital currency in the future; but the problem was that it was mainly used by drug dealers and on the dark web. Therefore, in the eyes of many, it was just an "experiment" and its use was "illegitimate."

However, people often overlook that many innovations in history were initially used by gray industries or marginalized groups. In such institutions, forming and publicly expressing a view on Bitcoin is extremely difficult, and companies like JPMorgan are unlikely to allow someone to publish such a white paper. However, we did publish the first Bitcoin white paper in 2014. At that time, Bitcoin's price was less than $1,000. Our judgment was that by 2022 (five years later), Bitcoin's reasonable value range would be about $22,000--$66,000; if triangulated across multiple models, it would be roughly around $25,000.

But this came at a commercial cost: some clients canceled their services with us because of it. Some well-known hedge funds even bluntly criticized us, saying we were "terrible and lost credibility" because we were discussing the so-called "internet currency" as a serious asset class. This indeed hurt us. It wasn't until around 2021 that this research line we had been investing in began to translate into actual positive benefits for the company.

Formation of the Four-Year Cycle Concept and Its Current Validity

Mario: Speaking of the present, please explain a concept that many outsiders do not understand: the so-called "four-year cycle." Previous market trends seem to follow a four-year cycle. How was this "four-year cycle" concept formed? Is it still valid today?

Tom Lee: When people discuss the "four-year cycle" in the crypto market, there is a certain reflexivity involved. The initial starting point is that Bitcoin has a "halving" supply rhythm, so price cycles are thought to follow the halving schedule. However, in a decentralized system without a central company, the lack of a unified information source makes price itself particularly important in the early stages. Many people began to look for patterns based on price movements, and the market would trade based on these patterns.

In fact, this is also true in traditional markets like stocks—our institutional clients still widely focus on "seasonality," applying calendar effects to price behavior, whether in credit markets, volatility, or stocks.

As for whether the "four-year cycle" still holds, many seasoned professionals in the industry are questioning it. The key point is that the incremental buyers of Bitcoin are no longer primarily retail investors—this has almost been the main narrative from its inception to 2024. Over the past two years, institutional allocations have begun to enter crypto assets. Therefore, the market may show a weakening or breaking of the existing four-year rhythm, even exhibiting counter-cyclical characteristics.

Mario: Similar viewpoints emerged in the last market cycle, when many people shouted "super cycle," but it turned out not to be the case. What indicators, aside from price, should we pay attention to this year to judge whether the "four-year cycle" will continue to be effective?

Tom Lee: Our crypto strategist Sean Farrell is still tracking the "four-year cycle." For the remainder of this year, this may not be crucial—regardless, the market should perform strongly at this stage. The real test will be next year, primarily with two points:

1. Will Bitcoin enter a downward phase according to the price cycle?

2. Will Bitcoin decouple from the stock market?

I believe both scenarios could happen, so we will also reduce the emphasis on a fixed "cycle." After all, historically, Bitcoin has had a high correlation with the stock market.

Mario: If the "four-year cycle" continues to hold, based on past experience, we should see the beginning of a bear market and a significant pullback by the end of this year. If the "four-year cycle" does occur, how might this round of pullback differ from the past, given that institutional funds have already entered the market?

Tom Lee: It should be noted that we are only discussing this theoretically at this moment; I am not explicitly predicting a pullback or "crypto winter." Historically, crypto winters have been very painful for Bitcoin: it is not uncommon for drawdowns to exceed 70%, and sometimes even approach 90%; altcoins often perform even worse.

I believe that the current buyers of Bitcoin are not just institutions, but also include sovereign-level purchases. The U.S. government has not yet fully articulated its strategy for establishing a "Bitcoin strategic reserve." But it can be compared to oil: when oil prices are low, the U.S. will replenish its Strategic Petroleum Reserve (SPR) at lower prices, thereby providing a bottom support for oil prices. If Bitcoin enters a winter and the U.S. adopts a "budget-neutral" purchasing strategy, then there will be active buying in the low price range. As long as there are stable buyers at low levels, the downside will be constrained.

Mario: Perhaps we can approach this from a macro perspective—especially regarding Powell's "somewhat yielding" stance under Trump's pressure.

Wahid Chammas: Let me first set a somewhat bearish analytical framework before responding to the points Mario mentioned. We are in this industry—Mario manages a large digital asset portfolio—so we inevitably have a bullish tendency. But I want to construct a more bearish perspective and see how you view the next cycle. Your judgments have been quite accurate over the years; however, contrarians might say that all of this can be broken down into "a rising tide lifts all boats": ample liquidity and interest rates at relatively low structural levels in long-term historical cycles. Looking back, this is also true—crypto assets emerged after the first quantitative easing (QE), in the context of the Lehman Brothers collapse and the financial crisis.

Then we entered a rate hike, leading to the first "crypto winter." After that, we experienced a new round of rate cuts and easing. The latest "crypto winter" almost coincided with Powell's strong fight against inflation. In other words, the opposition would argue that crypto assets are essentially just "high β risk assets," and their performance can be explained by loose liquidity and QE.

Now we observe that global interest rates are beginning to decline, and the U.S. is also expected to enter a rate-cutting phase, while the (Federal Reserve's) balance sheet is expected to stabilize. The question is: will it be that simple? Do the cycles in the crypto market primarily depend on liquidity and interest rates? Are we overcomplicating the issue?

Tom Lee: First of all, I have seen those charts comparing "global synchronized central bank liquidity" with Bitcoin prices, including Raoul Pal's proposed "leading by about 16 months" relationship, which is indeed quite close to reality in explaining the crypto market. Therefore, intuitively and logically, it makes sense that global liquidity can drive crypto assets to perform well. But I believe the crypto market is forming a second main narrative. In the past, the single narrative was more like: it is "digital gold," or a vehicle for trust and risk appetite, and it trades continuously 24/7—thus people used these frameworks to understand Bitcoin.

Now, this narrative is changing, one reason being the support from institutions and governments. A reference point can be borrowed: look at what has happened with venture capital (VC) and private equity (PE). In the past, VC/PE cycles were relatively predictable because the main participants were family offices, with shorter buying and selling rhythms and limited fundraising scales; once the field became institutionalized, the VC and PE cycles were completely transformed. Since a large influx of institutional funds, PE has almost ceased to exhibit traditional "cyclicality," and now the scale of PE has surpassed that of "spot stocks."

The New Narrative of AI Innovation in Finance and Global Debt

Tom Lee: The second narrative is related to AI, and adjacent to it is a wave of innovation that combines technology and finance. These two huge narratives are taking shape. The significance of AI lies in its ability to create "equivalents of labor" on a large scale for the first time, meaning the increase in labor no longer solely relies on demographic structures. At the same time, the financial industry has also received the green light to "reimagine itself." It is well known that the biggest cost in finance is human labor (salaries); and robots do not require bonuses.

A large part of the improvements will be implemented in practice, especially because we need identity verification and to transfer trust onto the blockchain. This is also why I believe that while we should still respect the impact of cycles and central bank liquidity on the market, the crypto industry is now breaking into more practically meaningful application scenarios.

Wahid Chammas: You often talk about demographic structures and the analysis of millennials—I remember you emphasized user adoption: the more adopters there are, the stronger the scale effect of Bitcoin, which in turn fosters more use cases. Ethereum is similar, gradually becoming financial infrastructure. These, along with interest rate cycles, form a long-term logic. I want to discuss something you have hardly mentioned publicly: the global debt and gap of about $600 trillion. Most people only look at sovereign debt, but if we add up household sector debt, corporate sector debt, and unfunded pension liabilities (which can be roughly divided into sovereign/residential/corporate and pension categories), the total is about $600 trillion. This scale is as sensitive as nitroglycerin. One viewpoint suggests that against the backdrop of an aging population, it is a strong deflationary force; another viewpoint believes that the solution can only be hyperinflation. So, setting aside the two main lines of "innovation" and "liquidity," how should this be resolved in the next five years? First, do you think it is really a problem? Secondly, what role do crypto assets play in this?

Tom Lee: This is indeed a significant issue. From a micro perspective, debt can suffocate businesses. Take Meta (Meta Platforms) as an example—even if it is one of the best companies in the world, if the debt/income ratio on its balance sheet reaches 300% or 500%, the company's operations will become extremely difficult: the CFO will be constrained by debt and forced to make suboptimal decisions; at this point, models like capital asset pricing and cost of capital will almost fail, and excessive debt will crowd out the space needed for efficient operations.

From a macro logical deduction, there should also be a critical point: when the debt of a country, economy, or government is too high, it will also be "choked." We know that a critical point exists, but we are unsure whether it falls within our investment horizon (for example, the next 12 months).

Two points have been swirling in my mind. First, the transformative nature of AI is very strong, and we can imagine many scenarios. I would give a "friendly AI scenario" about an 80% probability—in this scenario, AI will alleviate many structural problems (such as inequality). Imagine if robots could conduct agricultural production around the clock (24/7), then the hunger problem would be greatly alleviated; if they could also autonomously build housing, then "housing" would also be resolved, leading to significant positive outcomes.

Second, regarding "UBI" (Universal Basic Income). I want to introduce a viewpoint that may seem "a bit abrupt": crypto has already provided a "sample" of UBI—Bitcoin, Ethereum, and others are examples. Some people bought them early and then received enough passive income to sustain their livelihoods (or even luxurious lifestyles); aside from believing in and participating in the community, no extra labor was required. In this sense, crypto is a path to achieving UBI. It certainly does not cover everyone, but everyone had the opportunity. In the future, new crypto projects may emerge to further realize UBI in different forms. So, to summarize: Bitcoin and Ethereum, in a sense, have already acted as our UBI.

Mario: Returning to the previous question: do you think AI can ultimately solve the debt problems we currently face?

Tom Lee: In a sense, yes. It is not to deny existing legal contracts, but we have already seen how debt issues can be resolved in some "microcosms"—even through seemingly simple mechanisms like stablecoins. It is well known that stablecoins backed by fiat reserves form a "closed loop" in issuance (because they are pegged to the dollar); and stablecoin issuers will use corresponding reserves or pledged assets to purchase U.S. Treasuries, thus becoming buyers of U.S. debt.

In other words, stablecoins are providing a more durable financial stabilizer. Currently, Japan is the largest overseas holder of U.S. Treasuries, with about $1.2 trillion. Starting from this base, it does not require too much growth in magnitude for the stablecoin system's holdings of U.S. debt to potentially exceed Japan.

Tom Lee: Additionally, it should be noted that if central banks issue digital currencies, imagine if the Federal Reserve (Fed) were to launch a strict CBDC, allowing every American to have an account at the Fed. If monetary easing were to be implemented, the policy tool might no longer be interest rates, but rather directly depositing dollars into your account (similar to "helicopter money").

Then, if tightening is needed, the central bank can pay interest on that account or withdraw funds. In this framework, the yield curve may no longer exist; in a sense, long-term debt becomes more of a theoretical construct, as the long end may no longer have an independent market curve.

Tom Lee: Alternatively, companies may take over some functions of the government—this could also become a solution path. You may be more familiar with this. I want to illustrate this with a balance sheet perspective—America is perhaps the country that least wants a liquidity crisis to occur. If we consider the natural resources, real estate, and intellectual property that the U.S. possesses as assets, they can largely cover the burden of national debt. From this "balance sheet perspective," the U.S. is more likely to address its debt issues through assetization or asset-backed paths.

Why has ETH underperformed in this cycle and how to win in the stablecoin arena?

Tom Lee: I believe that ETH has underperformed over the past five years mainly due to undergoing a significant transformation. Today's ETH is very different from that of 2017: the network has completed the transition to Proof of Stake (PoS) and has implemented many protocol changes led or guided by the Ethereum Foundation. These changes may not necessarily be beneficial for ETH's token economics. However, I believe the situation has improved significantly this year—several internal issues within Ethereum have been corrected, including optimization of inflation rates and net issuance, significantly alleviating circulation pressure.

Secondly, two trends are supporting ETH:

1. The rapid proliferation of stablecoins has attracted the attention of Wall Street and U.S. authorities; the U.S. has signed the GENIUS Act, and the SEC's "Project Crypto" is pushing traditional finance (such as Wall Street) to start building on the blockchain.

2. Against the backdrop of accelerated development of LLMs and Agentic AI (especially physical robots), the complexity of AI will significantly increase. Training will not only come from online content like the internet/Tinder/Facebook but will also delve into real-world visuals and interactions, leading to an exponential increase in information, while also making the verification and security of instruction sources more challenging; this is precisely where blockchain and zero-knowledge proofs (ZKP) come into play.

Overall, Ethereum, known for its reliability and zero downtime, should benefit from the above trends. Of course, scaling still needs to be continuously advanced to achieve higher levels of usability.

Having been involved in the crypto industry for a long time, I have an intuitive feeling: the crypto community once "turned away from Ethereum" because many believed "the faster, the better," leading to the popularity of Solana and Sui; especially during the meme coin craze, those public chains seemed to have an advantage in token economics. However, if the next wave is driven by Wall Street, the demands will be different: Wall Street wants 100% uptime and is not sensitive to speed—because they can scale on Layer 2; they actually view staking as an advantage because it activates the "power law." For example, if Goldman Sachs stakes enough ETH, it can have a stronger positive voice in Ethereum governance and upgrade paths.

Last week, I was at SALT (Wyoming), talking to many OGs I know. I asked them: ETH has indeed been flat in price over the past five years; is that true? But technically, has ETH lagged behind? Or is it just that the price performance has been poor, so people are "disinterested"? They almost unanimously replied: it is mainly because the price has underperformed relative to Bitcoin, which is why there is "no feeling." Therefore, I believe that this year and the recent changes represent a critical moment for ETH, as it is beginning to re-gather the community. If the price stabilizes at a new historical high, for example, breaking and stabilizing above $4,800, then ETH may welcome a larger-scale cycle.

According to the data I have collected, the U.S. accounts for about 27% of global GDP; the dollar makes up about 55% of central bank foreign exchange reserves; in financial transactions, the dollar side's participation is about 80% (for example, crude oil is often priced in dollars, and many stock prices are quoted in dollars).

In stablecoin and crypto trading, dollar-denominated trading pairs are almost dominant—accounting for nearly 99%, with almost everything in the crypto market priced in dollars. So when discussing "the future of stablecoins," it essentially means: the dollar will become the preferred form of stablecoin. The reason is straightforward—people are accustomed to pricing and settling in dollars: whether it is merchants in India or Turkey, or even in Dubai, some people buy houses with USDT.

If the dollar is to become the pricing side of future stablecoins, then the existing market share may be reshuffled. Because, as you know, about 80% of stablecoin trading occurs outside the U.S., and it is mainly Tether, commonly found on multiple public chains like Tron. I believe the U.S. government wants to have a say in this "future of stablecoins," so it is more likely to focus on "compliant public chains that allow dollar stablecoins to operate."

If U.S. Treasury Secretary Scott Bessent's judgment holds—that stablecoins represent a $4 trillion market—then it means that stablecoin reserves will become a $4 trillion holder of U.S. Treasuries. Literally, the U.S. will no longer need to worry about financing for national debt, which is exactly what they are looking forward to.

Wahid Chammas: However, I offer a slightly different perspective. You just mentioned GDP, but foreign exchange reserves are declining. The reason is that about 43% of countries and regions globally are under sanctions, and geopolitical concerns have raised worries about the dollar's hegemony and its weaponization. Ironically, countries are adopting crypto assets and building (new) reserves in gold and crypto. And in the crypto space, they still hope that the dollar will account for 99%. In a sense, stablecoins provide the world with an "immunization shot," protecting it from what some call the abuse or weaponization of dollar hegemony; as long as stablecoins are pegged to the dollar, they can achieve a "both-and" transfer. You will see this trend of ebb and flow: official reserves decline while the importance of stablecoins rises.

Tom Lee: Yes, currently Tether's trading friction is the lowest; for example, USDT (Tron) can still operate freely; we can also cross-chain and then exchange back to other compliant stablecoins. I do not believe ETH is the only chain that can support stablecoins, but it is still the largest; and according to the power law effect, ETH's premium should primarily reflect in the price of ETH tokens, rather than in the stablecoins themselves. Moreover, in gaming, for example, Mythical (Games) has signed many mainstream partners and has significant influence in the real world (non-pure crypto context)—like the NFL, FIFA, and Pudgy Penguins. Gaming is very popular among younger demographics, and it is no longer just male participation; there are increasingly more female players, and the social attributes are strong. We see many crypto × gaming application scenarios.

What exactly is the DAT Digital Asset Treasury?

Tom Lee: Simply put, a digital asset treasury is an equity-like exposure. For example, if you have an account with Robinhood or Charles Schwab, you can buy shares of a publicly traded company that incorporates crypto tokens into its treasury. In other words, Michael Saylor is a typical example: when you buy shares of MicroStrategy (MSTR), you are essentially buying exposure to Bitcoin, as they continuously use surplus funds to purchase Bitcoin.

Many people will ask: since you can directly buy a Bitcoin ETF, why do you need to hold MicroStrategy?

The answer mainly has two points:

In the world of institutional stock investment, fund managers need to outperform benchmarks/find alpha, and they typically do not buy Bitcoin ETFs; their way of gaining exposure to Bitcoin is often by buying stocks of infrastructure companies, the simplest being MicroStrategy. Therefore, in terms of holdings, MicroStrategy is actually larger than any Bitcoin ETF (it may only be second to BlackRock's products, but it is generally at the forefront).

A well-operated crypto treasury can allow your crypto holdings to grow faster—faster than an ETF. The holdings of an ETF do not actively grow; whereas MicroStrategy refers to this as "levered Bitcoin." To give an example from their perspective: since launching the crypto treasury in August 2020, MSTR's "per-share Bitcoin value" was about $1 (the stock price at that time was about $13); by July 2025, this value increased to about $227, achieving hundreds of times of growth. During the same period, Bitcoin's price rose from about $11,000 to $18,000, an 11-fold increase, while MSTR's stock price rose from $13 to nearly $400, an increase of over 30 times.

Only a portion of the increase can be explained by the price appreciation of Bitcoin itself; the rest comes from the amplification effect of the treasury strategy—calculated by their metrics, the implied gains on the stock price are quite considerable. In fact, well-operated crypto treasuries often correspond to high-performing stocks. Michael Saylor recently released a chart: since 2020, MSTR's performance has outperformed all components of the "Magnificent 7," even outperforming Nvidia during that time.

From my 35 years of experience on Wall Street, diligence, knowledge, and intelligence probably account for only 2% of the results, while luck accounts for 98%. We do a lot of research every day, but the market is not under my control.

Regarding "crypto treasuries" (taking Ethereum as an example), their uniqueness stems from several reasons:

· First, Ethereum has native yield (staking yield). Some might say that ETFs can also achieve the same yield—not so. ETFs have liquidity and redemption constraints; even if regulations loosen staking in the future, the staking ratio of ETFs is unlikely to exceed 50%, otherwise it would affect redemption compliance.

· Second, Ethereum is a PoS public chain, which triggers the power law effect. If a certain Ethereum treasury is large enough, it will create positive externalities for the Ethereum ecosystem: for example, (assuming) Bitmine aims to capture 5% of the network share, it can sow DeFi liquidity, provide market-making/liquidity, or act as a staking partner when Wall Street goes on-chain, playing a role in more Ethereum underlying "rails." In a sense, crypto treasuries are more like digital infrastructure because the way they interact with the ecosystem determines their systemic role.

· Third, the primary principle is to maintain an extremely clean balance sheet, avoiding volatility amplification or being "choked" by debt. Therefore, Bitmine chooses to finance only with common stock, not issuing convertible bonds—because convertible bonds are essentially like debt, which amplifies leverage and risk.

In summary: why is the digital asset treasury DAT superior to token ETFs? The core lies in yield, especially the native yield brought by ETH staking. Additionally, as the "head" in liquidity and trading speed, it will also bring a relative net asset value (NAV) premium. This means that for every 1 ETH held on the balance sheet, the stock price often reflects a premium effect of about more than double. This gives it the ability to continuously enlarge the ETH position in the treasury and provide higher returns for shareholders. So what happens when the cycle reverses? When ETH rises, it naturally becomes smoother, which is exactly Michael Saylor's path; but a few years ago, Saylor was also on the edge of high risk due to margin calls. Therefore, one risk management principle is "to avoid debt as much as possible." Is there a scenario where, even with almost no debt, it is not enough, and if the market undergoes a deep pullback, this model will turn into risk and shareholder burden?

Risk Management and "Velocity (Per Share ETH Growth Rate)"

Tom Lee: Common stock is essentially an equity instrument, and a price drop does not trigger margin calls. When Bitmine announced its treasury strategy on June 30, the historical liabilities from its main entities were only $1 million; and as of today, the company still has only this $1 million liability. This means it is essentially debt-free, which keeps the incentives of the capital structure aligned—if you introduce convertible bonds/preferred stocks/debt, it will create conflicting incentives; whereas when everything is common stock, everyone is concerned about stock price performance. In this model, the execution power of the crypto treasury depends on what I call "velocity"—the speed at which the amount of ETH corresponding to each share can grow. On July 8, when the first transaction (a $250 million PIPE) was settled, the value of ETH corresponding to each share was about $4. By July 27, the dollar value of ETH held per share had risen to $22.84. "The growth rate of per-share ETH" will determine the risk-return differences between you and other paths (such as convertible bond financing), which is also Bitmine's unique feature. The mainstream practice in the past was to issue convertible bonds, sell forward premiums, to finance at lower capital costs and faster speeds; (although issuing new shares is also quick) but it is basically the path that MicroStrategy took. But frankly, this method has lower leverage compared to issuing convertible bonds, and the "velocity premium," combined with the liquidity premium from extremely high liquidity, creates a unique competitive advantage.

Therefore, our first principle remains: maintain a clean balance sheet—this is not only the optimal choice but also the reason we have gained market recognition due to high liquidity. Investors see us as a very "pure" target: there is no need to worry about convertible bonds suppressing volatility, or someone consuming liquidity on options contracts. Bitmine's options chain is also active, and we hope investors can take advantage of the volatility.

Of course, conditions may change in the future. If a downturn or misalignment occurs, ETH, due to its inherent staking yield, can indeed be considered for pairing with structured tools: with native yield, it becomes easier to cover fixed financing costs. But for now, this is only in our future plans; avoiding leverage has always been a wise choice. We have studied MicroStrategy's operating manual in detail—every financing timing and tool. I always return to this point: as long as we maintain liquidity, we should try to finance with common stock; as long as there is a good premium and institutional investors are willing to buy in large amounts, this path is the most suitable.

What does the entry of traditional enterprises mean?

Tom Lee: First, if they all buy ETH, that is a good thing—ETH prices will rise even more. I believe the stock market is smart and will "price layer" itself. As you can see, the market is already distinguishing the liquidity of different treasury stocks, which is why some targets are now trading only at net asset value (NAV). And you know, once it trades only at NAV, it is very bad because you have to resort to riskier tools (like debt or convertible bonds) to enhance per-share holdings, otherwise, you can only dilute all shareholders.

However, regarding the growth rate of per-share holdings, the market's pricing has not yet fully reflected it, but I believe it will appear soon. These "new companies" will not enhance the velocity of leading companies. MicroStrategy remains the king in "velocity"—they continue to expand their Bitcoin holdings, which is why they can still achieve high premiums. Meta Planet can also serve as an example.

Ultimately, this is very similar to the oil industry: investors price based on "reserves," and companies that can continuously grow reserves will receive higher valuation multiples. Looking back at Exxon and Chevron, they have long traded at premiums above reserves; among them, Exxon was the largest component of the S&P 500 by weight from 1995 to 2018, almost the entire time of a generation of investors, and never priced based on "earnings." I believe that today's "DAT model" companies are more like MLPs (Master Limited Partnerships) and E&P (Exploration and Production) types of asset-oriented businesses; in contrast, the market is more willing to pay a premium for companies with strong execution that can continuously "increase reserves."

Is there a 50% chance that Ethereum will surpass Bitcoin in the future?

Tom Lee: I remain very bullish on Bitcoin. From now until the end of the year, I believe $200,000 is still possible; the long-term target is $1 million. As for Ethereum, I believe its upside potential is greater. This is also one of the reasons we call it one of the biggest macro trades in the next 10-15 years: Wall Street building on-chain, driven by both AI and blockchain, will create a superposition of two funding groups.

Don't forget, the financial system accounts for half of the economy; and in the stock market, the valuation of the financial sector is significantly lower than that of the technology sector. Therefore, in such a world, there is room for revaluation in the financial sector, and Ethereum will be the beneficiary of network value. As for the end of the year, assuming Bitcoin has about 2 times upside potential from its current position, Ethereum's upside potential should be greater than 2 times. Looking at the longer term, over a five-year perspective, Ethereum's reasonable valuation is about $60,000 per coin, with considerable upside potential in the next five years. I believe the probability of Ethereum's network value exceeding that of Bitcoin is at least 50%.

What can RWA and tokenization bring us?

Tom Lee: My friends in the real estate industry believe that putting real-world assets (RWAs) like real estate on-chain will unlock a lot of value: from identity and property certification, transaction processes, to price recording and tracking, each link will be more efficient; thus bringing higher liquidity, which often means better pricing in price discovery. At the same time, it may alleviate the current structural imbalance in the real estate market. Therefore, this is significant.

Moreover, when society truly sees the benefits brought by tokenization, it will likely reduce friction. I believe that regardless of how the future of crypto develops, we should seriously consider "wealth and inequality"—not to "target anyone," but to ensure we do not inadvertently amplify inequality. In my view, crypto is quite the opposite: anyone can purchase crypto assets; this makes it more inclusive and conducive to wealth creation.

Mario: One last question, are you still worried about the narrative of "Ethereum killers"? If not, why? What makes you more confident in Ethereum?

Tom Lee: There are indeed faster alternative public chains, and they are quite useful. So even if Ethereum were to "flip" Bitcoin in network value, other public chains (like Solana and Sui) would also benefit. I believe that as more things are tokenized and go on-chain, a lot of value will be created.

Mario: But do you think the future will see multiple public chains coexisting, or will there only be one "ultimate public chain"?

Tom Lee: That remains to be seen. Being overly certain about a single path can easily lead to "tribalism." From the perspective of the financial system, single standards are not common—aside from the dollar, it may be the most universal "standard."

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