Tom Lee's Case for $22,000 Ethereum

**Tom Lee** (0:05)
Good morning, everybody. I'm glad to be presenting to you at Consensus in Miami, and I know it's been a great conference, and a good turnout, a lot of high-quality people here. I've got a 20-minute presentation, and it's very important, because there's three things that I want to impress upon you today. The first is that Crypto Winter is over, and the spring is here, meaning the bull market is starting, and most people don't recognize when a bull market is starting, so I want to give you the reasons why, that you should be adding to your exposure here, not selling. The second is the drivers of this next bull market, which are pretty straightforward, but I just really need to emphasize it, and why agentic AI and tokenization will make crypto-native entities probably more profitable than traditional banks. And the third is, of course, to talk about BitMine and why we're positioned for the next cycle.
Okay, so I know there's the Faga War, the US is at war with Iran, but that really shouldn't affect where things are scarce and what things are working. And that's the case because Bitcoin has now risen for three consecutive months. And as long as Bitcoin closes out above 76,000 by the end of May, that'll be the third consecutive month. Why does that matter?
You're never in a bear market if Bitcoin closes up three consecutive months. So since the inception of Bitcoin, being up two months in a row could happen in a bear market. For instance, that happened in 2022 But you've never had three consecutive months. So to me, if Bitcoin closes up above 76,000 this month, the bear market is definitively over. The second is that software stocks have bottomed. And as you know, software stocks have been highly correlated to Bitcoin. In fact, at Fundstrat on May 1st, we added software to our top sector picks. So we're recommending software names along with Mag-7, of course, the semis and crypto as our top sector picks at Fundstrat. And since the war started, crypto actually has been the best-performing assets. You can see Ethereum is the best-performing assets since the start of the Iran war. Okay. And the trends have turned positive. In fact, John Bollinger yesterday set his trend model, turned positive, and he now has a full position in Bitcoin. All right. So you might be so burned out because of the last crypto winter that you decided to give up on crypto. But keep in mind, crypto has been a huge diversifier. Okay. So I want to go back 10 years and say, if you had zero exposure to Ethereum 10 years ago, and you just bought the S&P, you'd have $229,000. That's the first row there. And that's starting with 100,000. If you bought just 1% of your portfolio into Ethereum 10 years ago, your total portfolio would be worth 520,000. So you doubled your total portfolio by adding 1% to Ethereum. By the way, if you added 5%, which is the third row, you could see that your portfolio would be worth 1.7 million. Basically, eight times your return. So crypto has been a huge diversifier when you think about 10 year cycles. And it's a great hedge, because another way to think of this is to say, how much of another asset do you need to own to absorb a 50% loss in the S&P 500? For Ethereum, if you had a 0.4% exposure, you would actually completely offset a catastrophe in your equity holdings. If you had to do this with gold, you would need to have 37% of your portfolio in gold. So again, Ethereum has provided the same hedge protection for 1.1 hundredths the exposure. So as we think about Ethereum's price, I do think it all comes down to what Bitcoin does. So here's Ethereum's price ratio.
I think the long-term average is the number just to think about, which is 0.048 and the 2021 high of 0.087.
If I lay that to where we think Bitcoin's fair value should be, which is around 250,000, the 2021 high average, for instance, would get you to 22,000 Ethereum. So at the current price of 2,300, Ethereum is cheap. And of course, as you can see, in crypto spring, in the early part of a cycle, Ethereum doesn't really move reflexively. So I think you're going to have plenty of time to buy crypto over the next few months. But again, if crypto winter has ended, by the end of this year, we're going to see some strong moves, just like we've been seeing with memory stocks currently. And Ethereum's exiting along consolidation. It's currently 2,300, but you can see it's been consolidating for five years.