Transcription
I believe Ethereum is the future of money. Here are some disclaimers. So, let's start with why I believe crypto spring is here. I know that many of you believe that we're still in the fog of war, and it is indeed true the US is in the midst of a conflict with Iran. But, what you have to focus on is that Ethereum has now risen for 3 months consecutively. And in fact, if Ethereum closes May above 2100, that would be the third consecutive month. As I'm highlighting here, there's never been a crypto winter where Ethereum has closed up three consecutive months in a row. In other words, the fact that we're up three months in a row means crypto winter is over.
If Bitcoin gets to 250,000, which we think is fair value in the next 12 months, and Ethereum gets to its the 8-year average of the price ratio, that's 12,000 Ethereum. That's a lot of upside from here. If it gets to the 2021 high, that's 22,000 Ethereum. Keep in mind, those are two numbers to watch. And if ETH becomes the payment rails of the future, which we believe is the case, that would imply a $62,000 Ethereum.
Ethereum just did something it has never done during a crypto winter, ever. Three consecutive months of gains. And according to Tom Lee, the chairman of Bitmain, and the man who called multiple crypto recoveries before Wall Street was ready to admit they were real, that single fact changes everything about what comes next.
But, there's actually something that should make you uncomfortable. Like, we're still in the middle of a US Iran conflict. Markets are nervous, sentiment is ugly, and somehow Ethereum is quietly doing something the historical data says only happens when a bear market is already over. Now, most people are too busy watching the headlines and tracking the fear to notice what the data is quietly showing right now. Lee just laid out exactly where he thinks this goes. The numbers are specific, the targets are extreme, and the logic behind them is harder to dismiss than you'd expect. Let's get into it.
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I believe crypto spring is here. I know that many of you believe that we're still in the fog of war, and it is indeed true the US is in the midst of a conflict with Iran. But, what you have to focus on is that Ethereum has now risen for the three months consecutively. In effect, if Ethereum closes May above 2100, that would be the third consecutive month. As I'm highlighting here, there's never been a crypto winter where Ethereum has closed up three consecutive months in a row. In other words, the fact that we're up three months in a row means crypto winter is over.
Another way to think of this is to look at software stocks and Ethereum. Both have been highly correlated to each other, and as you can see, software stocks have risen along with Ethereum. In fact, at Fundstrat, software is now among our top sector picks as of May 1. So, that gets us to some facts that Ethereum is the best-performing asset since the start of the Iran war. It's performing as a wartime store value. And here's the thing. It's been a great diversification tool since 2016.
Take a look at this first column that's highlighted. Let's look at different allocations you could have done in terms of owning Ethereum on December 31, 2016. From 0% all the way to 33%. And these are the starting dollar values. So, if you had $100,000, for instance, and you put 5% into Ethereum, that was $5,000 invested. This highlighted column is what it would be worth today. So, your $5,000 investment would have grown to 1.5 million. In other words, if you compare that to having zero allocated to Ethereum, okay? And you look at your total portfolio today, it's 230,000 if you had no exposure to Ethereum versus 1.7 million if you had 5% allocated to Ethereum. In other words, you would have a seven times increase in your total portfolio with just a 5% exposure to Ethereum.
Now, another way to think of this is how much of each asset would you need to own to protect yourself against a 50% decline in the S&P 500. Okay? So, this is the required hedge. You would need just 0.4% 10 years ago in Ethereum to protect yourself against a basically a wipeout in the stock market. Gold, which is considered a store value, you'd have to have 37% of your portfolio. So, you can see the point here. You'd want to own just a small piece of Ethereum as a source of diversification and as a hedge.
Now, Ethereum does track Bitcoin, so I think you should look at the price ratio. And the current price ratio is below not only the 8-year average, but the 2021 high of 0.087. And you've seen this chart from us before. If Bitcoin gets to 250,000, which we think is fair value in the next 12 months, and Ethereum gets to its the 8-year average of the price ratio, that's 12,000 Ethereum. That's a lot of upside from here. If it gets to the 2021 high, that's 22,000 Ethereum. Keep in mind, those are two numbers to watch. And if ETH becomes the payment rails of the future, which we believe is the case, that would imply 62,000 Ethereum. So, clearly a lot of upside from here.
And Ethereum is exiting a long consolidation, something I've talked about before. You can see this current consolidation is 5 years. But those other consolidations resulted in pretty explosive upside moves. 227 times after the 2016 consolidation, and after the 2020 consolidation, a 54x for Ethereum. So, I think this next upside is going to be led by tokenization and agentic AI.
So, let's talk about the future of money. Now, Elon Musk said something pretty profound recently. He says that this future system won't use dollars as currency, just mass and energy. What he's really referring to is that compute and energy are the two scarce assets. In fact, Larry Fink of BlackRock believes that compute will actually become a new asset class, and that we'll be buying futures of compute. Reid Hoffman, the billionaire founder of LinkedIn, said that crypto will become critical in an AI world. Okay.
Well, let's think about stablecoin transactions, which we had said last year was the ChatGPT moment for crypto, and you can see stablecoin volumes now exceed Visa payments. This is according to data from Bitwise. And Grayscale believes that the tokenized market is going to reach $300 trillion as we tokenize real estate, fixed income, equities, derivatives, commercial real estate, basically everything.
What does this mean for layer-1 blockchains? Well, this is Ethereum, which is in pink, and the total value locked tokenized assets, and you can see Ethereum moves pretty closely with that tokenization. Meaning that, according to Grayscale, networks that host a large share of tokenized activities may capture a meaningful portion of economic value. In other words, if Ethereum is the leading tokenization platform, its price will go up a lot. And Marc Andreessen, who's a very visionary about the future, says the grand unification of AI and crypto are age AI agents cuz they're going to need money. And we've talked about this before, that there's numerous reasons why blockchains are a better way for AI agents to use money.
What Lee is describing here isn't just a price recovery. It's a structural shift in what Ethereum actually is. The 3-month close pattern is significant precisely because it's never appeared during a genuine bear market, not even once in crypto history. Now, Lee is connecting Ethereum's price movement to something much larger than a crypto cycle. Stablecoin volumes have now crossed Visa payments. Grayscale is projecting a $300 tokenized asset market, and Ethereum is the dominant hosting network for all of it. If that tokenization thesis is even half right, the current price of Ethereum becomes not just a recovery, but a starting line. Tokenization is the future of assets, and money's becoming digital, and AI agents are going to use money.
Well, we should think about what it means for the most profitable banks in the future. Well, today JP Morgan is the most profitable bank in the world with 59 billion of net income projected this year, almost 60 billion. And 300,000 employees. But, let's mix in two new types of companies, Jane Street, which just is a trading firm, and Tether. Jane Street's on track to make $40 this year with 3,000 employees, 1/1000 the number of employees at JP Morgan. In fact, Jane Street in the first quarter of this year is reporting about 10 billion in net income. That means moving money, which is what Jane Street does, is starting to capture more value than the entire operations of a global bank. Again, going back to this chart, Jane Street makes more money than Bank of America, Wells Fargo, Citigroup, Morgan Stanley, and Goldman Sachs. And then, let's look at Tether, which is the largest stablecoin operator in the world. It's going to earn about 15 billion this year with 300 employees. So, 1/1000 the number of employees at JP Morgan. These are two new types of financial institutions didn't exist 20 years ago.
But, keep in mind, that's sort of the story that technology, as it gets introduced to sectors, creates disruption, and it reduces the value of incumbency. Now, I'm going to highlight a bunch here. Automobiles. We don't remember any of the horse buggy makers. We only think of the new entrants. With mobile, all these old names really largely don't exist. It's mostly mobile today. In digital media, nobody really remembers names like Hearst, Viacom, News Corp as the giants. They were the giants in their day. Today it's more Google, Meta, and TikTok. Even more recently, cloud computing. Before cloud computing, there were PC names: IBM, Compaq, Dell, Gateway. They've given away to Amazon, Microsoft, Azure, Oracle, Google Cloud. And finally, in EVs, these traditional auto makers are still around, but Tesla is far bigger. So, markets tend to overestimate the value of incumbency, and it's really the new entrants that capture a lot of that value.
Well, what does that mean? I believe in the next 10 years, half of the largest financial institutions in the world are going to be native digital companies, native digital asset companies, many of them in crypto.
And finally, let's talk about Bitmain. Bitmain's been building in the crypto winter. The first thing we did was invest in Aco, which is an intersection of AI and identity. It's a publicly traded company, ticker ORBS, and one of their biggest assets is their holdings of Worldcoin. Worldcoin is helping verified humans to prevent networks and systems that we use to be polluted by digital bots. I mean, take a look today. Basically, from everything from Polymarket to web traffic to emails, even to x.com and Reddit, are really starting to see more of the volume come from non-humans. In fact, Reddit wants to consider using face Face ID for human verification. Aco owns a stake in OpenAI, Worldcoin, and Mr. Beast. So, think of it as very similar to a company called Fundrise, ticker BCX. Whereas Fundrise trades at six times NAV, Aco is undervalued.
The second is Bitmain launched Maven, which is the largest single staking operator in the world. We launched commercial service at the end of March of this year. We have more than 14 billion of the assets staked, and we're staking about 2 billion of client assets currently, including um other tokens hyperliquid and Solana and Canton. As you can see, the staking operations are generating quite a lot of rewards for Bitmain. Over 300 million today, but on track to be 352 million once we've fully staked.
We also invested into Mr. Beast. Um I've talked about that before, but he is the largest content creator in the world, but he also bought Step Financial to turn it into a financial services company. I think for Gen Z and Gen Alpha, he's going to be the Robinhood, SoFi, and Chime combined. And of course, there's a huge wealth transfer coming for Gen Z and Gen Alpha.
We uplisted to the NYSE big board. That's a pretty big deal. And finally, we reached 4% of the Ethereum total coin supply. Bitmain was created on June 30th of 2025, and the first 1% of the Ethereum supply came in August. And as you can see the different milestones here, on April 10th, 4%. At this pace, we could reach 5% very quickly. But we actually want to slow the pace of accumulation, but we still expect to reach 5% of Ethereum sometime in 2026. And as far as price goes, keep in mind we're a digital asset treasury, so we're going to track the price of Ethereum, but we want to outperform Ethereum. For instance, in 2025, Ethereum was up 22% from June 30th to year-end, Bitmain rose 500%, which means it outperformed by 48,000 basis points. So far this year, Ethereum's down 18% and Bitmain's down 15, so it's outperforming by 310 basis points. But of course, if Ethereum goes up, so should Bitmain's price. The correlation is still around 90%.
So, uh recall those price targets we had, 22,000 for Ethereum, 62,000 for a payment rail, and of course, 250,000 using both Joe Lubin's price target for Ethereum and Securitize's recent price target for Ethereum. Well, that would value Bitmain's shares at 500 and 22,000, 1,500 at 62,000, and 5,000 per share at 250,000. So, you can see quite a lot of upside.
What Tom Lee is describing goes well beyond a crypto trade. He's making a case that the financial system itself is being rewritten. And the institutions that move the most money in the next decade aren't going to look anything like the ones that moved it in the last one. Look at the numbers he laid out. Jane Street is on track to make $40 billion this year with 3,000 employees. JP Morgan, the most profitable bank in the world, makes $59 billion with 300,000 people. Tether, a stablecoin operator that didn't exist 20 years ago, will earn $15 billion this year with 300 employees, 1/300 of JP Morgan's head count. Now, that's not a minor inefficiency, but a complete structural collapse of the old model happening in real time, quietly, while most people are still debating whether crypto is legitimate. Lee believes half of the world's largest financial institutions in 10 years will be native digital asset companies. And the data he's pointing to isn't speculative. This disruption already played out in automobiles, mobile, digital media, and cloud computing. The incumbents rarely survived those transitions at the top. They were replaced by companies that didn't exist before the shift happened. Now, that same shift is coming for money itself.
And nobody is loud enough about Ethereum's price targets actually represent. The $12,000 figure at the 8-year Bitcoin ratio, $22,000 at the 2021 high, and $62,000 if it becomes the payment rail of the global economy. Those aren't just price guesses, they're the outputs of a model where Ethereum is the infrastructure layer for a tokenized world worth hundreds of trillions of dollars. If the historical consolidation patterns Lee is pointing to hold, the upside from current levels isn't incremental. It's generational. And by the look of the data, that process is already in motion. Most people just aren't watching the right things to see it.
Drop your thoughts in the comments. And that's it for now. See you in the next one.