Transcription
So, if this is a two-year war, it's we're going to bottom pretty early into that process. I think we're just going to have to realize that stocks tend to bottom early in a wartime situation. So, we've looked at every war since 1900. Stocks will bottom within the first 10% of that war. Retail sentiment's very negative. Bulls less bears is minus 20. That's a tactical sign. The VIX closed above 30. And now I think earning season is going to show earnings probably going to hold up better. I think we're 90 to 95% through the sell-off.
>> What gives you that confidence?
Well, I think some of it's positioning. Any little bad news is going to cause people to de-risk, but as you know, that's why the positioning is is something to watch because at some point people have gotten too neutral and then less bad [music] things can happen in the market has a V-shaped recovery.
As President Trump delivers an address to the nation today and gives an important update on Iran, the next two to three weeks will be critical for all markets. As crypto markets continue to grapple with recent volatility, investors remain divided on whether Bitcoin and Ethereum are due for a pullback in the weeks ahead. This cycle is clearly entering a more intense phase. Yet, Tom Lee maintains a firmly bullish outlook pointing toward a potential parabolic move in the next few months of 2026.
What we're seeing in the short-term is familiar. Forced liquidations, leverage positioning, and the classic push and pull that emerges as an asset approaches a major psychological and technical threshold. But when you zoom out, the broader context tells a very different story. A number of analysts are now drawing a compelling comparison. Ethereum today appears to be mirroring Bitcoin's position in 2017 just before its explosive move from around $1,000 into mainstream [music] financial awareness as institutional capital began to take notice.
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In much the same way, Ethereum is now attracting serious attention from institutions, hedge funds, [music] asset managers, and large-scale investors who increasingly view it as more than a speculative instrument. Bitcoin meanwhile has been behaving more like a traditional [music] risk-on asset. That implies that in a broader market recovery, it would likely participate in a strong upside move.
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However, the uncertainty cannot be ignored. If macro conditions remain stagnant, [music] Bitcoin could continue to experience short-term pressure. With the current price sitting just over 66,900, up almost 1% in the past month. Despite that, engagement across the ecosystem continues to expand. Adoption is accelerating across sectors, from decentralized finance to stablecoins, and even the regulatory landscape, often viewed as a headwind, may be shifting in Ethereum's favor. This reframes Ethereum as something far more significant than a digital currency. It positions it as foundational infrastructure for the next generation of financial systems. And as Tom Lee emphasizes,
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we are likely still in the early innings. With increasing participation from Wall Street alongside sustained retail interest, Ethereum's upside narrative remains firmly intact. At this stage, [music] the debate is no longer whether Ethereum moves higher, but rather the pace at which it defines its next phase in the evolution of crypto markets.
Let's get right into the latest interview with Tom Lee, where he outlines his prediction for the days and weeks ahead. If anyone's been in crypto a long time, like this we're kind of used to the pain, you know, of these drawdowns. Um, but there is a difference that it is, you know, crypto will diverge from its narrative because it's evolving. Like it's becoming more of an institutional asset. And Bitcoin is down about 40% from its highs, almost 50%.
[music] I think it's like the seventh time it's fallen 50% from a recent or local high. Uh, three of those times there were genuine crypto winters, you know, like bear markets that led to a a 90% decline from the peak. But I think that this is probably more of a crypto squall, not a crypto winter. So, we're we're in a painful drawdown. Part of it was triggered from October 10th because on that date there was a a price shock, which was the Trump proposing new tariffs on China that triggered a whole cascade of deleveraging in the crypto industry, bigger than the FTX deleveraging that happened on November 2022. November 2022 basically marked the end of that bear market. And that's when things like transaction activity began to recover.
Um, the reason I don't think we're in a crypto winter is that things like if you look at Ethereum, daily transaction activity has actually been rising parabolically because of tokenization. And you know, Wall Street is starting to build on crypto. So, in some ways I think crypto just suffers from the fact that gold's done so well that it's sucked away risk appetite from everything else.
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You know, and there's no leverage in crypto. And if and and people who want to do zero-day trading and and high-frequency trading, it it's really paid to buy gold and silver right now.
I want to know what the black swan event is for crypto. I think there's a few. So, one is, of course, uh, if quantum can break encryption. So, what is it what will that do? It means you you won't be able to your Bitcoin will never be safe. Uh, yeah. So, Bitcoin itself will need to do unless they can somehow push an upgrade into the old wallets, which they can't. They they'll have to fork Bitcoin to a quantum-resistant chain.
>> And so, the old like Satoshi's wallet will just be
>> Yeah. So, all of a sudden like the lore of Bitcoin is kind of broken, right? Cuz you're abandoning Satoshi's Bitcoins. Like things like Ethereum, they upgrade twice a year. So, they're they can develop quantum resistance.
I think the second risk actually to crypto is is AI. Uh, in the sense that today the narrative is like AI uh, or needs to [music] to start to engage in microtransactions because like robots when they get into the wild, uh, you can't keep it in a in a walled garden, so you have to validate transactions. And of course, they have to collect money. And so, blockchains can sort of track all this and they all have digital wallets.
Um, and and by the way, if you generate enough tax revenue from that, you don't have to employ Americans anymore because like the government tax receipts will ex- will be big enough that people don't have to work. I mean, that's probably one way to at least create a financial safety net.
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Uh, but uh, what if AI gets so smart that they're all running their own blockchain? And so, you don't need public chains because AI runs their own language of validation. And so, you don't [music] need crypto because the AI, you know, as you as you know, like I know multiple is a fake, but you know how like AIs developing their own language and places to to linger, you know, if they're developing their own social language, they could always develop their own monetary system. It would be a question of like whether governments can regulate that structure and collect taxes.
I think that's one of the big criticisms about crypto in the past was that it was a way to maybe not be taxed. Um, so I I'm I'm sure that's part of like the policy effort, but you know, what what we're seeing in crypto today, of course, is just really a battle, a traditional battle, which is incumbents of which is Wall Street hijacking the narrative on crypto and the Clarity Act to kind of stack everything in their favor to try to quash uh, the new entrants. But that's like an old, you know, that's the the battle we've seen in every new technology.
Uh, but that's hurting public chains because Wall Street wants to sort of control the narrative. And I think if you were wondering why Bitcoin got clobbered this year, I think it has to do with the fact that gold has just gotten so big. Gold today has a $41 trillion total market value, okay? That means it's bigger than the S&P 500. Uh, in fact, it's the same size as the entire Asian stock market. Here I'm highlighting that just the intraday moving gold on January 31st was $5.2 trillion, okay? That's four times the size of Bitcoin itself.
[music] So, gold has gotten so big that when gold makes big moves like that, it's going to trigger margin calls everywhere else. But here's the thing. Is gold a good store value? Well, since 1971, I've plotted gold's return versus inflation on a three-year rolling basis, okay? And every time it's red, gold did worse than inflation. 48% of the time in the last 50 years, gold has not stored value. It's done worse than inflation. And then since Bitcoin was created, okay? Bitcoin has only underperformed inflation five months out of 160 months, which means 5% of the sorry, 3% of the time. But in that same period of time, if you ask me in 2026, I think gold is going to underperform Bitcoin.
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Ethereum isn't just holding its ground. It's starting to pull ahead. As Q1 of 2026 winds up, Ethereum has actually outperformed most other major crypto assets, driven by record on-chain activity, surging developer adoption, and growing institutional demand. While Bitcoin continues to anchor the market, Ethereum's momentum is signaling that it could be a real leader in this next phase, setting the stage for what analysts call its [music] strongest run yet.
Embracing an unyielding enthusiasm for the Bitcoin realm, Tom Lee confidently predicts that explosive growth is looming on the horizon >> [music] >> as BlackRock and many other crypto giants are doing just that. Tom Lee reassures that a long-expected surge awaits. By the end of 2025, there will be 1.1 billion active crypto wallets. The pace of growth is hard to comprehend, >> [music] >> and it will be the fastest accumulation of wealth we have ever seen. This is the conclusion of a career's worth of research. And every single chart and piece of research leads to the same conclusion. Liquidity drives everything, [music] and crypto will be the best-performing asset of them all.
I think the best days of crypto are ahead. This is the year that Bitcoin is going to resume its narrative, and why I think Ethereum is going to be one of the central casting characters. Bitcoin is down 29%. I think this caused a lot of people to throw in the towel around Bitcoin, and I think it's part of the reason why we're in a mini winter. The first is geopolitical uncertainty, but in that scenario, crypto should do well. The second is dovish central banks, and in that scenario, crypto should do well. The third is currency debasement, which has been happening. And again and again, gold does well, and crypto does well. But there's two other scenarios where crypto won't keep up with gold. One is if there's a lot of price momentum, and the second is that if there's a loss in the fiat system entirely, because as you know, Bitcoin is digital money. And if we stop using money altogether, Bitcoin's not going to outperform. So the question is, are we at the end of that period? I think crypto can't turn around until Bitcoin turns around, but I think Bitcoin can't turn around until gold actually starts to underperform, which again, I think this is it's this year.
And so let's turn to Ethereum. A lot of people are frustrated, but keep in mind Ethereum, since 2018, has fallen more than 50% eight times. In fact, last year, Ethereum fell 64% from January to March. But in of eight times, Ethereum's had a V-shaped bottom. Okay? So it's recovered 100% of the time with an almost the same speed it fell. So if you ask me, uh I don't think anything's changed. Is Ethereum going to have a V-shaped bottom after this decline? Yes. But obviously, your question is, has Ethereum bottomed uh at 1890? Bitmain, we work with Tom DeMark, who's I think one of the best market timers. He says that Ethereum just needs to touch 1890 again, which he calls an undercut, and then that would be a perfected bottom. So I think from our perspective at Bitmain, we think Ethereum is is really close to the bottom. And I think it's just like the fall of 2018, fall of 2022, fall of 2025, or sorry, April 2025, you you know, you don't really have to worry about the bottom. It's If you've already seen a decline, you should be thinking about opportunities here instead of selling.
And Ethereum has a lot of future drivers. Wall Street is going to be rebuilding its financial system on the blockchain. We've talked a lot about that with stablecoins. You know, there's a whole use case built around AI and agentic AI. And of course, there's a creator economy taking place, where creators are going to be using blockchain to really make sure creators get paid. We've been spending a lot of time with Wall Street. I'll tell you one thing that's clear to us. Uh, there's still a divide between evangelists uh at a company versus the C-level people, but Wall Street wants to use public chains. It's obvious to me. And they want to really dive in be supported by a broad community, which is why I think you're going to see especially some critical announcements in the next few months around major financial institu- institutions using Ethereum. And that's already been the case. And we know uh AI is gaining a lot of visibility. I I like this tweet yesterday from Vitalik. Again, I don't have enough time to cover it here, but I agree that enabling trustless and private AI interaction, and Ethereum is an economic layer for AI makes a lot of sense.
I think that you're seeing the rise of dominant dApps, and these dApps are arguably better than having exposure to the layer one itself. The two dominant dApps so far are MicroStrategy and Bitmain, two largest holders of cryptocurrencies. Bitmain around 4.4 million ETH. These two dApps are now 90% of the trading volume of all crypto dApps. So again, dominant. And you can see here, Bitmain is five times larger than the next largest dApp for Ethereum, and it trades [music] 14 times more trading volume. And trading volume is really the lifeblood of a dApp, because that's how we access the capital markets. And if you're skeptical if you can make more money owning a dApp than the underlying layer one, look at the performance. Bitmain was essentially created on June 30th. Uh the stock was $4.50. From June 30th to December 31, Ethereum was up 22%. But look at Bitmain. It rose 500%, meaning it outperformed Ethereum by 48,000 basis points. And look at 2026. Ethereum's down 32%, but Bitmain is down 21%, so it's outperforming by 1,100 basis points.
Where does all of this leave us? Ethereum has crossed $4,000, weathered [music] short-term volatility, and is now attracting the kind of institutional attention that once catapulted Bitcoin into the mainstream. Analysts are increasingly framing this as Ethereum's 2017 [music] Bitcoin moment, where the groundwork laid over the past decade [music] finally meets global recognition and capital inflows. But here's what makes this cycle different. Ethereum isn't just competing as a digital currency. It's the infrastructure powering decentralized finance, stablecoins, and entire ecosystems of applications that regulators and institutions are beginning to take seriously. That combination of utility and adoption is exactly why many see $5,000 >> [music] >> and beyond as not just a price target, but an inevitable milestone.
Over the past year, Ethereum has quietly outperformed most other major crypto assets. [music] Tom Lee and other top analysts emphasize this point. Ethereum's real growth story is still ahead [music] of us. With Wall Street leaning in, developers innovating faster than ever, >> [music] >> and adoption spreading across industries, Ethereum is positioned to be a defining force as we head into 2026. The bottom line. The short-term swings may grab headlines, but the long-term trajectory is unmistakable. Ethereum is evolving from a promising blockchain into a cornerstone of digital finance [music] and technology. And if history is any guide, the breakout we're seeing now could be just the opening chapter of Ethereum's biggest run yet.