Tom Lee: ETH to HIT $9k by January (The Tokenization "Super Cycle" Begins)
Summary
Ethereum Supercycle: Guest is strongly bullish on Ethereum, citing a potential supercycle and near-term price targets of $7,000–$9,000 driven by adoption and innovation.
Stablecoins: Stablecoins are framed as the catalyst for tokenizing finance, with their growth compared to seminal moments like leaving the gold standard.
Tokenization: The tokenization of dollars and eventually all assets is highlighted as inevitable, enabling 24/7 trading, risk management, and new financial products.
DATs (Digital Asset Treasuries): DATs are described as an emerging asset class, with strategy differentiation, NAV dynamics, consolidation prospects, and institutional suitability discussed in depth.
MicroStrategy (MSTR): Positively profiled for its BTC strategy, perceived durability, capital markets execution, and as a leading indicator for Bitcoin price inflections.
Worldcoin (WLD): Advocated as a unique proof-of-humanity solution critical for a digital/AI agent world, with a direct strategic investment and alignment with Ethereum.
Market Structure & Liquidity: Recent crypto underperformance is attributed to systematic/liquidity-driven selling and retail deleveraging, with a pending shift toward institutional participation.
Macro/Fed: The Fed’s path is pivotal; eventual cuts and regulatory de-risking could align to support the crypto/DAT setup despite current cautious messaging.
Transcript
But we think ETH can be 7,000 9,000 by the end of January. And that's that's a huge recovery move, but that's also pretty typical of what could happen in the fourth quarter. Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.comfree. With markets hitting all-time highs, now is a great time to stress test your strategy and be prepared for what comes next. >> Ladies and gentlemen, welcome back to Wealthon. My name is Chris Perkins. I'm the president of Coinfund and today it's my honor to speak with Tom Lee, founder of Fundstrat and chairman of Bitine Inversion Technologies, the largest ETH treasury in the world. Bit mine now owns 3% of ETH token supply. And Tom, that's twothirds of the way to your 5% targeted goal, isn't it? >> Uh, yes, that's right. Um, our initial target and not necessarily our long-term target is to get 5% of this circulating supply of Ethereum. >> Amazing. So, I was just saw you down at the Caner conference and you've had one heck of a presentation. Um, you talked about how the Genius Act and even the SEC's project crypto is going to be as transformational transformational to the financial services and and you made it uh you drew similarities to Brett and Woods and the US dollar leaving the gold standard and you said that this is going to be as big a catalyst. C can you unpack that a little bit when it comes to ETH and stable coins? >> Um, yes, I'd be glad to. Um you know for the listeners you know in 1971 uh was when the US formally withdrew uh from the gold standard meaning the dollar was no longer redeemable for gold. And from that point forward uh the US and other countries not every country went off the gold standard basically said that from this point forward a dollar is only exchangeable for another dollar. Okay. So the dollar um became essentially synthetic relative to gold. And in 1971, many investors correctly bought gold because they said, well, you know, that's the original store value. However, the second uh reality is that we had to suddenly protect the dollar to make sure it was going to be the world's reserve currency. Because if that was no longer exchangeable for gold, then a country that was still in the gold standard could become the new reserve currency. So what happened? Wall Street built a bunch of new products to make sure that the dollar became the accepted standard. You know, over that ensuing 10-year period, it was money market funds were created, CDs, futures, ETFs, and what and it was successful because the dollar remained the global reserve currency. and today it's now 80% of all financial trading pairs. Um in 2025 there is a similar evolution taking place and it really started with stable coins which is that the dollar which was already now synthetic uh became tokenized on the blockchain. So now the dollar is now digitally represented. Um, and that's what is a stable coin is because it's backed by treasuries, but it's still basically just a digital dollar that is going to be creating the roadmap for a lot of other assets to become digital tokenized on a blockchain. And it's a big deal. We know that in crypto for instance the projects that have actually emerged from as native blockchain products have actually been better mousetraps and that's something that is drive driving and sending wall street to build the first of these has been the stable coin and tether and tether as an entity now it's it's valued and they're raising an at what is reported to be $500 billion that would make it the second most valuable bank in the world and even even if it ends up being raising at 400 billion or 300, whatever that number is, they're still the second most valuable bank in the world after JP Morgan, which is 869 billion. So, a company that has today maybe 300 full-time equivalent employees um is almost as valuable as a bank like JP Morgan has 313,000 employees. So, there's a lot happening. There's a lot of benefits that come from tokenization and and I think that that's the big unlock that's coming. >> Yeah, totally. Uh, you know, we're a fiduciary um and I know you're you're close with my partner Seth and we talk about this all the time. Uh, as fiduciaries, I think the equity markets uh globally have about 127 trillion in market cap. I think fixed income is about 150 trillion. But as a fiduciary, given the option and if liquidity was the same, I always have to buy the token rather than the legacy fiat instrument because I can manage my risk on weekends and nights. And so I've always been of the opinion, you know, slow slow then all at once everything has to tokenize because I need to trade it. Um, how do you do you agree with that thesis? Do you think that's how it's going to play out and and what does that mean? You know, there's plenty of blockchains, you know, obviously you are drawn to Ethereum. Um, would like to start getting into that as well. Uh yeah, I agree. I agree with with you, Chris. It is um uh when something becomes native digital, it is it works really well. Um I mean there's many examples. I mean for instance uh um you know crypto trading 247 is an example but look at how we do all communications. It is all native digital now. I mean uh emails are digital or you know messaging and in fact over the last 10 years I think it's a low estimate to say that at least 50% of all GDP growth in the last 10 years is native digital. It's probably now close to 60%. In the next 10 years it's probably going to be what 70%. So increasingly almost all innovation and growth is native digital and yet we're using geographically defined um currencies and we're trading instruments um only 5 days a week uh with specific market hours even though during those market hours 99% of all the trading is already electronic anyways. Um, I think one of the challenges as we tokenize is of course going to be making sure there's still the same liquidity that's available because we know one of the one of the glitches in crypto is liquidity is not universal. And so we do want to make sure prices are correctly reflecting a deep and full market whenever we see a a price posted. But that's of course software. I mean someone can define prices correct or put limits um on price change if necessary >> 100%. You know I remember back in futures markets where I come from buns uh electronified overnight and liquidity migrated you know over to URX and so I think that phenomenon is definitely going to happen once again in our space. All right so let's talk about Ethereum. Um you've talked about Ethereum entering a super cycle. We talk about stable coins as we mentioned being that chat GPT moment. Uh you've made a 60k call on ETH. Um but right now the market seems to be thinking about things differently. Um we've seen it pull back, ETH pull back under 3K. Personally, I think it's a great entry point. Um why do you think this disconnect for something that is so obvious to you, pretty obvious to me? Why are we trading as we're trading right now with Ethereum? >> Yeah. Um well, you know, their Ethereum and Bitcoin are uh public tokens and so their price isn't going to be purely anchored on fundamentals. You know, they're going to be reflecting uh investors perceptions because both Bitcoin and Ethereum are not mature platforms. Um their best utility and growth and innovation are in the years ahead, right? So we're already we're 10 years in, but there's more growth in the future. The percentage of market share of crypto of total assets is so small that we know that mathematically that's true. Whenever you're when you have something that has a hyperrowth on-ramp and you're discounting the future, it's going to be very volatile. So does Ethereum's price going from 4,800 to 2800 I mean that is a staggering decline but that probably is a minor change in 2030 fundamentals that is being priced and repriced by investors and that's why there's hyper volatility. Um it's one reason why Bitmine ended up engaging Tom Demar as a strategic adviser because he is the king of sort of price discovery. you know, he is the father of systematic timing and u in our conversations uh one when he looks at Ethereum uh he he sees what looks like um engineered or systematic liquidation taking place. So there there is someone that is uh in and in crypto we know it's you know market makers play a big role but there is someone that is probably capital constrained uh and is therefore bleeding or having to sell reflexively as price falls. Um that process is painful but in in his sort of rough timing range uh his downside target and you know we talked about this a few weeks ago was 2500 for ETH. So I think we're so close to that. It would be ideal actually for us to actually bleed to that level because then uh that that is creating what he calls a buy setup. You know a a bottom in prices for him is when the last seller has sold. So that stock a stock or crypto no longer falls on bad news. I mean that's what he thinks makes a bottom. So it would, I think, be a a better situation to see crypto prices bleed lower to 2500, but it but it could reverse at any time. Amy, because markets don't have to do what ends up being an ideal scenario. >> Yeah. So I think you've talked about this and we've we identified it. There was a terrible market crash in crypto and 1010 as we call it. Uh some some crappy pricing, uh issues with feeds, a couple other reasons, low liquidity. It led to this material auto deleveraging as we call it um which I think kept I think some market makers market neutral players were definitely cut off sides and so I think what you're describing is this is this systematic selling is it is it all related really to that idiosyncratic event of 1010 >> uh I mean I'd say if someone wanted to say why did crypto diverge from equities >> um that's I think a big role because they're in that in the past um 6 weeks nothing has actually fundamentally explained why crypto should be underperforming risk assets um because the S&P of course has had a draw down but the S&P continued to rise for another 20 days um you know the S&P didn't peak till the 29th so that divergence has has to reflect either a change in how market function in crypto or was there an ex existential new risk? I mean the only new exist existential risk would be like if quantum innovations came along but there hasn't been that. So >> you think it's existential or just idiosyncratic? I mean nothing seems existential here to me. >> Well I mean Chris, the one thing that I would say that maybe isn't reflected in price is the number of account holders that got wiped out on October 10th. And I think that's and we we may not even hear from them because, you know, they're they've been liquidated. Um I think I to me that's probably uh now that could be someone's simply saying there was just too much leverage that's why leverage is hitting crypto harder. I mean that's a possible explanation but to me again especially working with Demar team I I think that there is something that is causing a lot continued leaking but we're close to the end of that leaking. >> Yeah. My sense is that we're going through a flipping right now and it's not the traditional flipping of ETH market cap surpassing Bitcoin. It's to your point it's it's the retail got hit. Retail es and flows. Retail's ebbing right now. But the real flipping is that institutions are coming back into the market. And I think um Bitmine and others are going to be a big part of making that happen. And so like I I personally think you have this like kind of this gap period. Um but but I guess we we shall see. Um wanted to get back into your Ethereum core thesis and you know as you're going around now talking to investors around the world you know Bitcoin has been pretty easy to explain. Um you know it's digital gold. One of the things you spoke about was that 10 years and to me like that's the starting line. When I was in uh traditional markets, I would need 10 years of risk before I could get into anything. How do you tell the Ethereum story and how how is it how has it evolved, you know, as you started to have these conversations? >> Yeah. Um well, you know, I I think you're you're spot on, Chris. Like when someone says, uh what is Bitcoin? I think everyone really accepts it as it's it's a store of value, a really a really good way to store value and that's accepted today. In fact, someone might say that's like a Lindy effect that that that people believe that um when we first started writing about Bitcoin in 2017 uh and and digital gold was one way to sort of argue Bitcoin's value, it was not accepted because many people said, "Well, come on. I mean, it's just code. I mean, how can code store value? Or why can't there be a 100 bitcoins? Or look, I could create a new bitcoin tomorrow or I could fork bitcoin and create a new bitcoin or I can't buy I remember one client saying they couldn't buy a bottle of water with bitcoin. So, how could it even be valuable? So uh but of course all those arguments fell away and now we have digital gold, Bitcoin store value. Even as gold gets tokenized which I think will compete with Bitcoin to an extent, you still have Bitcoin which is a really good way to store and transfer value. But Wall Street um is also understanding there are a lot of virtues to to a blockchain and it's and it's the ability to not only store value but to store information and to actually transact and conduct and actually uh rearchitect almost everything that Wall Street does, but they need a smart contract platform. And so that's where uh all these other uh L1s start to become a lot more important to Wall Street's future because if if the big banks, the blue chips build stable coins and they're going to tokenize stocks and let stocks trade 24/7 and then innovate that too as which we I discussed at the caner which is like things like factor factoriize a stock. So null just like in the bond market where you can factor a bond we can factor Tesla so that you're only buying the implied future value of Optimus Prime. So instead of asking Tesla to make itself a tracking stock, you can synthetically create that on the blockchain. So uh you can't really do that on Bitcoin. So you have to build it on a smart contract L1 or L2. And the reason I think Ethereum is going to be one of the leading platforms is number one, its sheer size. You know, it is by far much bigger than the number two or number three L1's. Um, it has a huge and growing developer community that is really dedicated and it's and it's global. Um, so I think it's a true uh robust community with actual known values. Um, and it's a neutral blockchain with 100% uptime. So I think that this becomes uh one place where it's going to be easier for people to create innovative products. So for instance, let's say JP Morgan um or Goldman want to just do tokenized stocks in 24/7 um and they want to control as much of that as as they want as they can on a blockchain because you lose a bit of control. they're uh they may not necessarily say they want to do a lot of this on Ethereum, but then someone's going to come along and create a product that does do this and it's supported by a community and then it gathers all the liquidity. That's exactly what happened with something like Poly Market, right? On a prediction market basis where it came natively out of the blockchain and and today broke out into the real world and is look, it's the most cited uh way to actually understand events in the future. I mean, it's the clo the poly market is the closest to having a crystal ball today. Like, it is the closest to tomorrow's newspaper. And it's a a native blockchain product. It didn't come out of an existing Wall Street desk that created this product. It was it was created by builders. So that's why I think Ethereum and it doesn't have to be only Ethereum succeeding. You know, I think Ethereum there there will be room for others, but I I to me I I can see the clearest roadmap for Ethereum succeeding. >> Yeah. On Poly Market, man, I've been watching it like crazy. Um it's just such good information to have. Uh, and I think a lot of bullishness is going to happen with Mike Celig now as as future chairman of of the CFTC being able to normalize those markets. On the bank side, I don't think a lot of people saw this, but um, B, I was I'm an ex- banker. Basel really drives bank behavior and the fact that even Basel's now saying up, I think we got it wrong with the stable coin thing. We're actually going to move to we're going to make these capital rules more favorable. Uh, we have to rethink them for public blockchains like Ethereum. I think that's going to be a humongous unlock. Um anyway, wanted to get to the DAT story and you know, I've been a big proponent of DATs. I think that they're going to be a really important interface for these ecosystems being able to access uh public equity markets, but there are a lot of haters out there. They don't they don't see the value. Um you are chairman of the second largest DAT in the world. Um the largest in Ethereum h how do you address those haters? What's the value that DATs bring? Um yeah, Chris, uh I think it I think DATs are becoming an asset class. Um but the market is skeptical as you said. The reason they're skeptical, uh is that there are so many DATs that it's not clear what differentiates each strategy of a DAT. So I think maybe to level set I could explain uh Micro Strategy and and Bitline um and they're pursuing different strategies. Um Micro Strategy has 3% of the Bitcoin network. Uh they've become so important that I do think that they have what I call a sovereign put. We know sovereign funds are buying a lot of Bitcoin. They continue to buy it. So, as much as Bitcoin has languished, it's really, as you know, shifted hands to basically large holders now. And um Micro Strategy owns so much Bitcoin that if the US government ever needed to buy uh 10% or whatever size of the Bitcoin reserve they want, Micro Strategy represents a a very easy way to get 3% of that. So, I I think that they have uh endurance that way. And then they've been very clever about essentially productizing their balance sheet and monetizing Bitcoin's volatility and its future price appreciation with all their various products. Now, Bitmine um also owns 3% of Ethereum. So we are similarly scaled to micro strategy but pursuing a very different strategy at the moment which is um Bitmine knows that there is uh infinite future innovation in front of Ethereum because Ethereum uh and the Ethereum foundation have really shifted to becoming a lot more friendly to financial innovation and products. Stephen Vitalic thinks that's, you know, cuz he's prouser. Um the but Ethereum needs bridges between Wall Street and the developer community and the DeFi community and really defining parameters and identifying projects and prioritizations and even uh alliances. And that's where Bitine with 3% of the Ethereum network is essentially in a way becoming part of that bridge. Uh we are really trying to align ourselves very closely with the Ethereum Foundation and a lot of developers but also acting as that conduit and idea generator for Wall Street. Um so that's how we're trying to accomplish this as a DAP. But of course, you should stay tuned because that means by necessity we we're going to have to also spawn and create additional businesses to support all those functions. And I think that's um why Bitmine and Micro Strategy have a clearly defined idea that there's a power law at play. And then as you start to become more uh reflexive with the community itself, you're going to be creating other uh opportunities and productizations. Of course, we don't really reveal things that we do before we do them. Um >> yeah, for sure. >> So uh so that's and then I think the other DATs have to really also then ask themselves are they scale players on their own? The good news is that within Salana and Ethereum, because of the native yield, the companies that the debts that have raised enough Ethereum can probably have viability uh if they're not going to grow their ETH holdings. Um, if you're looking for a simple, secure way to invest and own physical gold and silver, visit our sister company, Hardass Assets Alliance, at hardassetsalliance.com. That's hardassallalliance.com. Yes. So on that, you just announced the Maiden America validator network. Um, which is going to seems like it's going to be core to your operating company. Um, is is that going to be one of your core businesses? >> Uh, you know, it it it's it remains to be seen. I I think but it's an example of how Bitmine operates because we we were looking at staking solutions. Um, and we sent out RFPs to almost every major staking provider. Uh we did comprehensive audit and review uh and we selected three uh four really initial partners. Um we haven't named them yet >> but then these four are going to help us actually uh create the Maven staking network. uh and it's because we want to have a best-in-class solution but also OFAC friendly uh US Treasury friendly uh Wall Street friendly um but it's an example of how um we're trying to create standards that are really not we're not trying to optimize for like time to market right we're we're pretty slow to announce a staking solution yeah >> but we wanted to be really thoughtful about it and of course We also wanted to make sure we weren't going to have a negative impact on the staking on actual staking itself. >> Yeah. >> Because, you know, with 3.6 million Ethereum, I mean, it's it's a huge amount of ETH to move. >> Yeah. 100%. Um, but that should drive some nice sustainable yield, probably around 3%. Um, you also made a strategic investment uh in Orbs uh or ACO, which is the world coin DAT. Uh, I think it was like a $38 million um stake. Can can you explain how that ties into your overall thesis? >> Yes. Um yeah, and and Bitmine made a $20 million investment in orbs, but in in 8, which is the ticker orbs, but uh Worldcoin um I think is actually one of the really most unique um projects out there. Uh now for those who aren't familiar with what world does um world is uh offers proof of human verification. Okay. And uh the way they do it involves a lot of proprietary technology that really works. Um they are essentially scanning someone's iris, not storing your iris. They're not storing your biometric information. So you don't have to worry about, you know, big brother or surveillance on chain because they're doing a cryptographic hash of your iris. So all they're doing is uniquely recording that you have an iris that no one else has. Um, and that's really important because we know that in this world that's becoming increasingly digital, uh, it's harder to verify our our own humanity, but also verify, uh, that it is us. Um, you know, whether it's voice or deep fakes and especially in an increasingly agentic world where there's going to be autonomous agents and even robots, I think it's going to be important. So world is one of the few real solutions out there and uh so the token of course is uh the token of the world technology and um so we and it and it's an ERC20 it runs on Ethereum so to us that's a really important project something that we want to support and the way we can support that of course is to invest in an a treasury a world coin tre Treasury, which is the ticker orbs. >> Love it. Yeah, big fans of that project as well. Uh Tom, so so you know, you you have Maven, you you're doing strategic investments and sounds like you've got plans that you can't really talk about. You also announced recently a dividend. Um c can you talk us through that calculus? >> Um yeah, glad to. Um we announced an annual dividend and it's an operating dividend of a penny uh per share. Now, uh, it reflects, uh, Bitmine's commitment to to focus on shareholder return. And, uh, this is a this is a dividend. It's going to represent a payout that's less than 1% of expected earnings. So, of course, it's not it's sustainable. Uh, it doesn't require borrowing any money to pay the dividend. Um, but it but it also is unique because if we look at the world of large cap crypto stocks, we are the only company that's over $9 billion of market cap or even 5 billion that's paying a dividend. Um, in the future institutional world, uh, um, having paying a dividend is not only a sign of stability. Nvidia pays a dividend. In fact, um roughly half of the Mag 7 AI stocks pay a dividend. Um but it does allow you to also be owned by core funds and income oriented funds as well. >> Love it. And the other differentiation I would suggest is just your sheer volume. Uh today Bitmine's the 50th most traded stock in the US. I think it's trading 1.6 billion per day. Uh that seems like as you're moving into the institutional space something that's very important. C can you unpack that? Uh yeah, and Bitmine really does benefit from a stock that trades uh really actively. Um even this morning uh you know we're trading about the same volume as um you know basically as PalAto Networks. I'm just taking a look at it now. Um so we we trade like a large cap tech stock and uh we also have really high volatility. The implied volatility of Ethereum is already quite high. It's more than twice that of Bitcoin. But um the implied volatility of Bitine is super high. So it attracts a whole class of uh not only individual investors. Um but it does attract a lot of highfrequency traders because um volatility and and using our options chain makes it very attractive. And there have even been leveraged ETFs created. I think there's two leverage ETFs created for Bitmine. Um, and at some point it is attractive to actually try to monetize that volatility. You know, Micro Strategy did that by doing a series of huge convertible offerings. Um, uh, I mean, it ended up, you know, being a meaningful percentage of how they raise capital. So, it's a future option for Bitmine, but for now, we would prefer to keep the company's balance sheet super clean. Again, a company is just straight equity funded. >> Yeah. So, why don't we get into MNAVs really quick? And right now, the entire DAT space is pretty much most DATs are have an MNAV below one, meaning that the price the the market capitalization of the stock is less than the value of the underlying crypto. um it kind of puts stats in a difficult position because it's not a great time to issue new equity um to to to buy tokens. How do you navigate this situation where the MNAV drops less than one? >> Uh yeah. Well, if if a company has their MNAV below one, um they they do have a few options, but you know, it is a lot of uh it is essentially a situation that is not always entirely in the hands of a company because when something trades below one MNAV, it reflects pessimism about the future, an element of the future of that company for instance they it could be trading at a discount to MNAP because the company has an expense structure that's too high >> y >> um and uh so I think there are several DATs where their asset management fees are really high you know um they a really well ststructured debt should have an asset that that custody and management fee >> um should be below that of an ETF >> y >> um and ETFs are 44 basis points so that's like what your your your fish target. Um the second is uh that's the market could be very skeptical of the prospects of that crypto itself because a stock is a discount to the future and then a crypto token is a discount to the future. So the stock in theory is going to be signaling uh price expectations about the crypto maybe even before the crypto does. Um, in fact, uh, that's why if someone's trying to figure out when Bitcoin bottoms, they're actually better off watching Micro Strategy. >> Micro Strategy turned down first before Bitcoin rolled over and Micro Strategy stock will bottom before Bitcoin bottoms. Um, so if some if a company is in the position of trading below NAV and they're viable, so let's say they have enough ETH and and they actually generate yield. They know that they aren't going out of business, so they don't need to raise money, but they also can't necessarily raise money using equity. Okay? So if that debt wants to grow, they have to do a non-equity instrument to grow. So that's one solution. If they want their equity price to recover, then they have to convince the market of two things or three things really or all three, one of three or all three. One is they have to convince the market that they are a viable steward of capital. And if their expense structure is too high, they have to rightsize their expenses. Um then they have to secondly convince markets that they are shareholder friendly. Um, and that either means, you know, a roadmap to what they're actually doing and it shouldn't be maximizing staking yield because, you know, I think that's makes investors nervous because there's no such thing as a free lunch. >> Yeah. >> Um, and uh, but it could be a shareholder return plan. Um, but if they are a small company and they're not growing, that is a really tricky spot to be in. Like if you're subbillion dollars, >> you know, you're, you know, that's a wasteland in the equity world, as you know, Chris, like you come from traditional markets, like sub billion dollars, like there's a gajillion companies. >> Yeah. >> Um, you need to be closer to 10 billion. So the third is that they have to take action and either they can try to consolidate with each other to get bigger. >> Yeah, >> they could convert to an ETF uh so become an investment company and then convert to an ETF and suddenly they won't trade at um a discount. They could start dividending all their yield and if they're right sized on expenses um that that works too. But you know a a proper debt like Micro Strategy and Bitmine you know they're not trying to just be stable with their holdings. They're trying to grow uh accretively their crypto holdings per share and you know even Micro Strategy has has managed to you know raise a couple billion dollars in the past month. >> Yeah I think the the right the debts that are well managed and and you know expect for these days to come. I mean we've been in finance forever. You always end up in the tail. Something always happens and you need to be prepared. So, the folks who can weather this storm, I think are going to be really well positioned. So, so how long do you think, Tom, until um M&A really hits this space? I mean, it seems as though those companies you're talking about that didn't quite make it um it's going to be M&A season here in the DOT space. You think that's that's on the horizon? >> Yeah. Uh it has to be, Chris. So, um you know, the DATs the fact that there's a lot of debts flailing doesn't surprise me because that's capitalism, you know. So, um, >> yeah, >> today there's only 3,000 listed stocks, the 3,500, right? Or I don't know, 42. I mean, Russell Wilshshire 5000 is no longer 5,000 stocks, but >> um, but there's been like more than 40 45,000 IPOs and spin-offs since 1970. In fact, that that Statam sighting ended at 2015, so there's probably close to 55,000 And in our study that we did at Fundstrap, 90% of IPOs and spin-offs fell 90%. And of those, half of them went to to zero. So meaning most companies fail. And so what we're seeing in that world, just like in crypto, is that this Darwinian process is happening very quickly. Um, but in order for mergers to happen, it's the seller has to become realistic. That's I think the problem because a seller would say, >> yeah, >> well, in June I was just at this price. Why do I have to sell now? So, I think that that's the sobering of that process is what is probably what's holding up M&A because of of course there's plenty of buyers out there. Um, but you know, one of the tricky things is, you know, someone who's trading at a premium to NAV is not going to want to pay a premium to NAV of another company. >> Yeah, 100%. >> Uh, trading at 7 because that's offering a massive premium. Um, so so they're it's really just the bid ask is probably the biggest impediment. >> You know, we have the Fed coming up. It looks like they're now going to cut after like they weren't sure. Now it looks like where they're going to cut. I mean I'm tracking Poly Market, but you know, how do you see this macro setup? Um it looks like sentiment is like terrible right now in the space. Macro seems to be kind of getting better. Um when it comes to the rates outlook, I would say medium to long-term between regulatory de-risking. It's actually a really good setup for DATs, particularly where the MNAVs are right now. Um this I guess really my last question here is how do you see macro impacting you in the space? Uh yeah, macro is actually really a big deal, Chris. Um you know, crypto was the first really to sniff out like and it's going to be responding to a a Fed, right? And if the Feds remains hawkish and executes policy error, you know, that's bad for crypto prices. Um that's why um it's really important for uh anyone involved in crypto understand that what the Fed's going to do uh is a big deal. I think the Fed has is in a very difficult spot because if there wasn't what was what looks to be as political interference, I think the Fed would be cutting uh without question now because um bond market is showing future inflation expectations are falling and that means that if the if monetary policy doesn't adjust its real rates are getting tighter. We're actually putting more tightening into the economy. But as you know, um, the Fed has to make sure its actions don't look like they've been politically driven. >> Yeah. >> And that not just the market's perception, >> right? Because there people tend to think of it as, oh, well, this is the bond market or stock market's conclusion. That's not really what I think that what the Fed's concerned about. It's really the the integrity organization. you know, they have 30,000 or more employees and each of them is seeing this relentless attack from the White House. So, I I think to the extent that the Fed governors and the voting members know that it's the morale of the institution that's at stake, so this is why the Fed is even more guarded in their actions and much more deliberate in their messaging because they don't want anything they do to look politically motivated. And and unfortunately that's been bad for markets because the markets have interpreted that as the Fed is is hawkish. And I mean they do sound hawkish. So um I I think it means that there's going to be an alignment later in later months when inflation is fallen enough and the Fed can now make cuts where it's no longer viewed as politically motivated. >> Right. So they need a little more overhead cover. Awesome. Really appreciate it. Any last thoughts, Tom, before we let you go and get get back after it? >> Uh, well, you know, it's just uh just I think for anyone who's involved in crypto for a long time knows this and so there's many who are new, but crypto has declines and we're not necessarily in a bare market and it feels terrible. In fact, uh that that's what you have to be mindful of is that it's a hypervolatile space. So, it feels terrible now, but just like in 2024, crypto felt terrible for many months and then we've had these big moves. >> Yeah, you have the meltdown then you have the meltup. Um volatility works in both directions. Uh before I let you go, uh any uh price targets for ETH? Yeah, I think well uh in the near term you know there is downside maybe to 2500 but that that's minor compared to the upside of of trying to discount a super cycle. So we think ETH can be 7,000 9,000 by the end of January and that's that's a huge recovery move but that's also pretty typical of what could happen in the fourth quarter. >> Well I I hope you're right sir that would be music to my ears. Um really really appreciate you coming on and uh I learned a ton today. Um ladies and gentlemen, Tom Lee, uh founder of Funstrat and the chairman of Bitmine. Thanks again, Tom. >> Thanks, Chris. Really appreciate it. >> Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.comfree. With markets hitting all-time highs, now is a great time to stress test your strategy and be prepared for what comes next. Thank you all for watching. We'll see you again next time. [Music]
Tom Lee: ETH to HIT $9k by January (The Tokenization "Super Cycle" Begins)
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Transcript
But we think ETH can be 7,000 9,000 by the end of January. And that's that's a huge recovery move, but that's also pretty typical of what could happen in the fourth quarter. Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.comfree. With markets hitting all-time highs, now is a great time to stress test your strategy and be prepared for what comes next. >> Ladies and gentlemen, welcome back to Wealthon. My name is Chris Perkins. I'm the president of Coinfund and today it's my honor to speak with Tom Lee, founder of Fundstrat and chairman of Bitine Inversion Technologies, the largest ETH treasury in the world. Bit mine now owns 3% of ETH token supply. And Tom, that's twothirds of the way to your 5% targeted goal, isn't it? >> Uh, yes, that's right. Um, our initial target and not necessarily our long-term target is to get 5% of this circulating supply of Ethereum. >> Amazing. So, I was just saw you down at the Caner conference and you've had one heck of a presentation. Um, you talked about how the Genius Act and even the SEC's project crypto is going to be as transformational transformational to the financial services and and you made it uh you drew similarities to Brett and Woods and the US dollar leaving the gold standard and you said that this is going to be as big a catalyst. C can you unpack that a little bit when it comes to ETH and stable coins? >> Um, yes, I'd be glad to. Um you know for the listeners you know in 1971 uh was when the US formally withdrew uh from the gold standard meaning the dollar was no longer redeemable for gold. And from that point forward uh the US and other countries not every country went off the gold standard basically said that from this point forward a dollar is only exchangeable for another dollar. Okay. So the dollar um became essentially synthetic relative to gold. And in 1971, many investors correctly bought gold because they said, well, you know, that's the original store value. However, the second uh reality is that we had to suddenly protect the dollar to make sure it was going to be the world's reserve currency. Because if that was no longer exchangeable for gold, then a country that was still in the gold standard could become the new reserve currency. So what happened? Wall Street built a bunch of new products to make sure that the dollar became the accepted standard. You know, over that ensuing 10-year period, it was money market funds were created, CDs, futures, ETFs, and what and it was successful because the dollar remained the global reserve currency. and today it's now 80% of all financial trading pairs. Um in 2025 there is a similar evolution taking place and it really started with stable coins which is that the dollar which was already now synthetic uh became tokenized on the blockchain. So now the dollar is now digitally represented. Um, and that's what is a stable coin is because it's backed by treasuries, but it's still basically just a digital dollar that is going to be creating the roadmap for a lot of other assets to become digital tokenized on a blockchain. And it's a big deal. We know that in crypto for instance the projects that have actually emerged from as native blockchain products have actually been better mousetraps and that's something that is drive driving and sending wall street to build the first of these has been the stable coin and tether and tether as an entity now it's it's valued and they're raising an at what is reported to be $500 billion that would make it the second most valuable bank in the world and even even if it ends up being raising at 400 billion or 300, whatever that number is, they're still the second most valuable bank in the world after JP Morgan, which is 869 billion. So, a company that has today maybe 300 full-time equivalent employees um is almost as valuable as a bank like JP Morgan has 313,000 employees. So, there's a lot happening. There's a lot of benefits that come from tokenization and and I think that that's the big unlock that's coming. >> Yeah, totally. Uh, you know, we're a fiduciary um and I know you're you're close with my partner Seth and we talk about this all the time. Uh, as fiduciaries, I think the equity markets uh globally have about 127 trillion in market cap. I think fixed income is about 150 trillion. But as a fiduciary, given the option and if liquidity was the same, I always have to buy the token rather than the legacy fiat instrument because I can manage my risk on weekends and nights. And so I've always been of the opinion, you know, slow slow then all at once everything has to tokenize because I need to trade it. Um, how do you do you agree with that thesis? Do you think that's how it's going to play out and and what does that mean? You know, there's plenty of blockchains, you know, obviously you are drawn to Ethereum. Um, would like to start getting into that as well. Uh yeah, I agree. I agree with with you, Chris. It is um uh when something becomes native digital, it is it works really well. Um I mean there's many examples. I mean for instance uh um you know crypto trading 247 is an example but look at how we do all communications. It is all native digital now. I mean uh emails are digital or you know messaging and in fact over the last 10 years I think it's a low estimate to say that at least 50% of all GDP growth in the last 10 years is native digital. It's probably now close to 60%. In the next 10 years it's probably going to be what 70%. So increasingly almost all innovation and growth is native digital and yet we're using geographically defined um currencies and we're trading instruments um only 5 days a week uh with specific market hours even though during those market hours 99% of all the trading is already electronic anyways. Um, I think one of the challenges as we tokenize is of course going to be making sure there's still the same liquidity that's available because we know one of the one of the glitches in crypto is liquidity is not universal. And so we do want to make sure prices are correctly reflecting a deep and full market whenever we see a a price posted. But that's of course software. I mean someone can define prices correct or put limits um on price change if necessary >> 100%. You know I remember back in futures markets where I come from buns uh electronified overnight and liquidity migrated you know over to URX and so I think that phenomenon is definitely going to happen once again in our space. All right so let's talk about Ethereum. Um you've talked about Ethereum entering a super cycle. We talk about stable coins as we mentioned being that chat GPT moment. Uh you've made a 60k call on ETH. Um but right now the market seems to be thinking about things differently. Um we've seen it pull back, ETH pull back under 3K. Personally, I think it's a great entry point. Um why do you think this disconnect for something that is so obvious to you, pretty obvious to me? Why are we trading as we're trading right now with Ethereum? >> Yeah. Um well, you know, their Ethereum and Bitcoin are uh public tokens and so their price isn't going to be purely anchored on fundamentals. You know, they're going to be reflecting uh investors perceptions because both Bitcoin and Ethereum are not mature platforms. Um their best utility and growth and innovation are in the years ahead, right? So we're already we're 10 years in, but there's more growth in the future. The percentage of market share of crypto of total assets is so small that we know that mathematically that's true. Whenever you're when you have something that has a hyperrowth on-ramp and you're discounting the future, it's going to be very volatile. So does Ethereum's price going from 4,800 to 2800 I mean that is a staggering decline but that probably is a minor change in 2030 fundamentals that is being priced and repriced by investors and that's why there's hyper volatility. Um it's one reason why Bitmine ended up engaging Tom Demar as a strategic adviser because he is the king of sort of price discovery. you know, he is the father of systematic timing and u in our conversations uh one when he looks at Ethereum uh he he sees what looks like um engineered or systematic liquidation taking place. So there there is someone that is uh in and in crypto we know it's you know market makers play a big role but there is someone that is probably capital constrained uh and is therefore bleeding or having to sell reflexively as price falls. Um that process is painful but in in his sort of rough timing range uh his downside target and you know we talked about this a few weeks ago was 2500 for ETH. So I think we're so close to that. It would be ideal actually for us to actually bleed to that level because then uh that that is creating what he calls a buy setup. You know a a bottom in prices for him is when the last seller has sold. So that stock a stock or crypto no longer falls on bad news. I mean that's what he thinks makes a bottom. So it would, I think, be a a better situation to see crypto prices bleed lower to 2500, but it but it could reverse at any time. Amy, because markets don't have to do what ends up being an ideal scenario. >> Yeah. So I think you've talked about this and we've we identified it. There was a terrible market crash in crypto and 1010 as we call it. Uh some some crappy pricing, uh issues with feeds, a couple other reasons, low liquidity. It led to this material auto deleveraging as we call it um which I think kept I think some market makers market neutral players were definitely cut off sides and so I think what you're describing is this is this systematic selling is it is it all related really to that idiosyncratic event of 1010 >> uh I mean I'd say if someone wanted to say why did crypto diverge from equities >> um that's I think a big role because they're in that in the past um 6 weeks nothing has actually fundamentally explained why crypto should be underperforming risk assets um because the S&P of course has had a draw down but the S&P continued to rise for another 20 days um you know the S&P didn't peak till the 29th so that divergence has has to reflect either a change in how market function in crypto or was there an ex existential new risk? I mean the only new exist existential risk would be like if quantum innovations came along but there hasn't been that. So >> you think it's existential or just idiosyncratic? I mean nothing seems existential here to me. >> Well I mean Chris, the one thing that I would say that maybe isn't reflected in price is the number of account holders that got wiped out on October 10th. And I think that's and we we may not even hear from them because, you know, they're they've been liquidated. Um I think I to me that's probably uh now that could be someone's simply saying there was just too much leverage that's why leverage is hitting crypto harder. I mean that's a possible explanation but to me again especially working with Demar team I I think that there is something that is causing a lot continued leaking but we're close to the end of that leaking. >> Yeah. My sense is that we're going through a flipping right now and it's not the traditional flipping of ETH market cap surpassing Bitcoin. It's to your point it's it's the retail got hit. Retail es and flows. Retail's ebbing right now. But the real flipping is that institutions are coming back into the market. And I think um Bitmine and others are going to be a big part of making that happen. And so like I I personally think you have this like kind of this gap period. Um but but I guess we we shall see. Um wanted to get back into your Ethereum core thesis and you know as you're going around now talking to investors around the world you know Bitcoin has been pretty easy to explain. Um you know it's digital gold. One of the things you spoke about was that 10 years and to me like that's the starting line. When I was in uh traditional markets, I would need 10 years of risk before I could get into anything. How do you tell the Ethereum story and how how is it how has it evolved, you know, as you started to have these conversations? >> Yeah. Um well, you know, I I think you're you're spot on, Chris. Like when someone says, uh what is Bitcoin? I think everyone really accepts it as it's it's a store of value, a really a really good way to store value and that's accepted today. In fact, someone might say that's like a Lindy effect that that that people believe that um when we first started writing about Bitcoin in 2017 uh and and digital gold was one way to sort of argue Bitcoin's value, it was not accepted because many people said, "Well, come on. I mean, it's just code. I mean, how can code store value? Or why can't there be a 100 bitcoins? Or look, I could create a new bitcoin tomorrow or I could fork bitcoin and create a new bitcoin or I can't buy I remember one client saying they couldn't buy a bottle of water with bitcoin. So, how could it even be valuable? So uh but of course all those arguments fell away and now we have digital gold, Bitcoin store value. Even as gold gets tokenized which I think will compete with Bitcoin to an extent, you still have Bitcoin which is a really good way to store and transfer value. But Wall Street um is also understanding there are a lot of virtues to to a blockchain and it's and it's the ability to not only store value but to store information and to actually transact and conduct and actually uh rearchitect almost everything that Wall Street does, but they need a smart contract platform. And so that's where uh all these other uh L1s start to become a lot more important to Wall Street's future because if if the big banks, the blue chips build stable coins and they're going to tokenize stocks and let stocks trade 24/7 and then innovate that too as which we I discussed at the caner which is like things like factor factoriize a stock. So null just like in the bond market where you can factor a bond we can factor Tesla so that you're only buying the implied future value of Optimus Prime. So instead of asking Tesla to make itself a tracking stock, you can synthetically create that on the blockchain. So uh you can't really do that on Bitcoin. So you have to build it on a smart contract L1 or L2. And the reason I think Ethereum is going to be one of the leading platforms is number one, its sheer size. You know, it is by far much bigger than the number two or number three L1's. Um, it has a huge and growing developer community that is really dedicated and it's and it's global. Um, so I think it's a true uh robust community with actual known values. Um, and it's a neutral blockchain with 100% uptime. So I think that this becomes uh one place where it's going to be easier for people to create innovative products. So for instance, let's say JP Morgan um or Goldman want to just do tokenized stocks in 24/7 um and they want to control as much of that as as they want as they can on a blockchain because you lose a bit of control. they're uh they may not necessarily say they want to do a lot of this on Ethereum, but then someone's going to come along and create a product that does do this and it's supported by a community and then it gathers all the liquidity. That's exactly what happened with something like Poly Market, right? On a prediction market basis where it came natively out of the blockchain and and today broke out into the real world and is look, it's the most cited uh way to actually understand events in the future. I mean, it's the clo the poly market is the closest to having a crystal ball today. Like, it is the closest to tomorrow's newspaper. And it's a a native blockchain product. It didn't come out of an existing Wall Street desk that created this product. It was it was created by builders. So that's why I think Ethereum and it doesn't have to be only Ethereum succeeding. You know, I think Ethereum there there will be room for others, but I I to me I I can see the clearest roadmap for Ethereum succeeding. >> Yeah. On Poly Market, man, I've been watching it like crazy. Um it's just such good information to have. Uh, and I think a lot of bullishness is going to happen with Mike Celig now as as future chairman of of the CFTC being able to normalize those markets. On the bank side, I don't think a lot of people saw this, but um, B, I was I'm an ex- banker. Basel really drives bank behavior and the fact that even Basel's now saying up, I think we got it wrong with the stable coin thing. We're actually going to move to we're going to make these capital rules more favorable. Uh, we have to rethink them for public blockchains like Ethereum. I think that's going to be a humongous unlock. Um anyway, wanted to get to the DAT story and you know, I've been a big proponent of DATs. I think that they're going to be a really important interface for these ecosystems being able to access uh public equity markets, but there are a lot of haters out there. They don't they don't see the value. Um you are chairman of the second largest DAT in the world. Um the largest in Ethereum h how do you address those haters? What's the value that DATs bring? Um yeah, Chris, uh I think it I think DATs are becoming an asset class. Um but the market is skeptical as you said. The reason they're skeptical, uh is that there are so many DATs that it's not clear what differentiates each strategy of a DAT. So I think maybe to level set I could explain uh Micro Strategy and and Bitline um and they're pursuing different strategies. Um Micro Strategy has 3% of the Bitcoin network. Uh they've become so important that I do think that they have what I call a sovereign put. We know sovereign funds are buying a lot of Bitcoin. They continue to buy it. So, as much as Bitcoin has languished, it's really, as you know, shifted hands to basically large holders now. And um Micro Strategy owns so much Bitcoin that if the US government ever needed to buy uh 10% or whatever size of the Bitcoin reserve they want, Micro Strategy represents a a very easy way to get 3% of that. So, I I think that they have uh endurance that way. And then they've been very clever about essentially productizing their balance sheet and monetizing Bitcoin's volatility and its future price appreciation with all their various products. Now, Bitmine um also owns 3% of Ethereum. So we are similarly scaled to micro strategy but pursuing a very different strategy at the moment which is um Bitmine knows that there is uh infinite future innovation in front of Ethereum because Ethereum uh and the Ethereum foundation have really shifted to becoming a lot more friendly to financial innovation and products. Stephen Vitalic thinks that's, you know, cuz he's prouser. Um the but Ethereum needs bridges between Wall Street and the developer community and the DeFi community and really defining parameters and identifying projects and prioritizations and even uh alliances. And that's where Bitine with 3% of the Ethereum network is essentially in a way becoming part of that bridge. Uh we are really trying to align ourselves very closely with the Ethereum Foundation and a lot of developers but also acting as that conduit and idea generator for Wall Street. Um so that's how we're trying to accomplish this as a DAP. But of course, you should stay tuned because that means by necessity we we're going to have to also spawn and create additional businesses to support all those functions. And I think that's um why Bitmine and Micro Strategy have a clearly defined idea that there's a power law at play. And then as you start to become more uh reflexive with the community itself, you're going to be creating other uh opportunities and productizations. Of course, we don't really reveal things that we do before we do them. Um >> yeah, for sure. >> So uh so that's and then I think the other DATs have to really also then ask themselves are they scale players on their own? The good news is that within Salana and Ethereum, because of the native yield, the companies that the debts that have raised enough Ethereum can probably have viability uh if they're not going to grow their ETH holdings. Um, if you're looking for a simple, secure way to invest and own physical gold and silver, visit our sister company, Hardass Assets Alliance, at hardassetsalliance.com. That's hardassallalliance.com. Yes. So on that, you just announced the Maiden America validator network. Um, which is going to seems like it's going to be core to your operating company. Um, is is that going to be one of your core businesses? >> Uh, you know, it it it's it remains to be seen. I I think but it's an example of how Bitmine operates because we we were looking at staking solutions. Um, and we sent out RFPs to almost every major staking provider. Uh we did comprehensive audit and review uh and we selected three uh four really initial partners. Um we haven't named them yet >> but then these four are going to help us actually uh create the Maven staking network. uh and it's because we want to have a best-in-class solution but also OFAC friendly uh US Treasury friendly uh Wall Street friendly um but it's an example of how um we're trying to create standards that are really not we're not trying to optimize for like time to market right we're we're pretty slow to announce a staking solution yeah >> but we wanted to be really thoughtful about it and of course We also wanted to make sure we weren't going to have a negative impact on the staking on actual staking itself. >> Yeah. >> Because, you know, with 3.6 million Ethereum, I mean, it's it's a huge amount of ETH to move. >> Yeah. 100%. Um, but that should drive some nice sustainable yield, probably around 3%. Um, you also made a strategic investment uh in Orbs uh or ACO, which is the world coin DAT. Uh, I think it was like a $38 million um stake. Can can you explain how that ties into your overall thesis? >> Yes. Um yeah, and and Bitmine made a $20 million investment in orbs, but in in 8, which is the ticker orbs, but uh Worldcoin um I think is actually one of the really most unique um projects out there. Uh now for those who aren't familiar with what world does um world is uh offers proof of human verification. Okay. And uh the way they do it involves a lot of proprietary technology that really works. Um they are essentially scanning someone's iris, not storing your iris. They're not storing your biometric information. So you don't have to worry about, you know, big brother or surveillance on chain because they're doing a cryptographic hash of your iris. So all they're doing is uniquely recording that you have an iris that no one else has. Um, and that's really important because we know that in this world that's becoming increasingly digital, uh, it's harder to verify our our own humanity, but also verify, uh, that it is us. Um, you know, whether it's voice or deep fakes and especially in an increasingly agentic world where there's going to be autonomous agents and even robots, I think it's going to be important. So world is one of the few real solutions out there and uh so the token of course is uh the token of the world technology and um so we and it and it's an ERC20 it runs on Ethereum so to us that's a really important project something that we want to support and the way we can support that of course is to invest in an a treasury a world coin tre Treasury, which is the ticker orbs. >> Love it. Yeah, big fans of that project as well. Uh Tom, so so you know, you you have Maven, you you're doing strategic investments and sounds like you've got plans that you can't really talk about. You also announced recently a dividend. Um c can you talk us through that calculus? >> Um yeah, glad to. Um we announced an annual dividend and it's an operating dividend of a penny uh per share. Now, uh, it reflects, uh, Bitmine's commitment to to focus on shareholder return. And, uh, this is a this is a dividend. It's going to represent a payout that's less than 1% of expected earnings. So, of course, it's not it's sustainable. Uh, it doesn't require borrowing any money to pay the dividend. Um, but it but it also is unique because if we look at the world of large cap crypto stocks, we are the only company that's over $9 billion of market cap or even 5 billion that's paying a dividend. Um, in the future institutional world, uh, um, having paying a dividend is not only a sign of stability. Nvidia pays a dividend. In fact, um roughly half of the Mag 7 AI stocks pay a dividend. Um but it does allow you to also be owned by core funds and income oriented funds as well. >> Love it. And the other differentiation I would suggest is just your sheer volume. Uh today Bitmine's the 50th most traded stock in the US. I think it's trading 1.6 billion per day. Uh that seems like as you're moving into the institutional space something that's very important. C can you unpack that? Uh yeah, and Bitmine really does benefit from a stock that trades uh really actively. Um even this morning uh you know we're trading about the same volume as um you know basically as PalAto Networks. I'm just taking a look at it now. Um so we we trade like a large cap tech stock and uh we also have really high volatility. The implied volatility of Ethereum is already quite high. It's more than twice that of Bitcoin. But um the implied volatility of Bitine is super high. So it attracts a whole class of uh not only individual investors. Um but it does attract a lot of highfrequency traders because um volatility and and using our options chain makes it very attractive. And there have even been leveraged ETFs created. I think there's two leverage ETFs created for Bitmine. Um, and at some point it is attractive to actually try to monetize that volatility. You know, Micro Strategy did that by doing a series of huge convertible offerings. Um, uh, I mean, it ended up, you know, being a meaningful percentage of how they raise capital. So, it's a future option for Bitmine, but for now, we would prefer to keep the company's balance sheet super clean. Again, a company is just straight equity funded. >> Yeah. So, why don't we get into MNAVs really quick? And right now, the entire DAT space is pretty much most DATs are have an MNAV below one, meaning that the price the the market capitalization of the stock is less than the value of the underlying crypto. um it kind of puts stats in a difficult position because it's not a great time to issue new equity um to to to buy tokens. How do you navigate this situation where the MNAV drops less than one? >> Uh yeah. Well, if if a company has their MNAV below one, um they they do have a few options, but you know, it is a lot of uh it is essentially a situation that is not always entirely in the hands of a company because when something trades below one MNAV, it reflects pessimism about the future, an element of the future of that company for instance they it could be trading at a discount to MNAP because the company has an expense structure that's too high >> y >> um and uh so I think there are several DATs where their asset management fees are really high you know um they a really well ststructured debt should have an asset that that custody and management fee >> um should be below that of an ETF >> y >> um and ETFs are 44 basis points so that's like what your your your fish target. Um the second is uh that's the market could be very skeptical of the prospects of that crypto itself because a stock is a discount to the future and then a crypto token is a discount to the future. So the stock in theory is going to be signaling uh price expectations about the crypto maybe even before the crypto does. Um, in fact, uh, that's why if someone's trying to figure out when Bitcoin bottoms, they're actually better off watching Micro Strategy. >> Micro Strategy turned down first before Bitcoin rolled over and Micro Strategy stock will bottom before Bitcoin bottoms. Um, so if some if a company is in the position of trading below NAV and they're viable, so let's say they have enough ETH and and they actually generate yield. They know that they aren't going out of business, so they don't need to raise money, but they also can't necessarily raise money using equity. Okay? So if that debt wants to grow, they have to do a non-equity instrument to grow. So that's one solution. If they want their equity price to recover, then they have to convince the market of two things or three things really or all three, one of three or all three. One is they have to convince the market that they are a viable steward of capital. And if their expense structure is too high, they have to rightsize their expenses. Um then they have to secondly convince markets that they are shareholder friendly. Um, and that either means, you know, a roadmap to what they're actually doing and it shouldn't be maximizing staking yield because, you know, I think that's makes investors nervous because there's no such thing as a free lunch. >> Yeah. >> Um, and uh, but it could be a shareholder return plan. Um, but if they are a small company and they're not growing, that is a really tricky spot to be in. Like if you're subbillion dollars, >> you know, you're, you know, that's a wasteland in the equity world, as you know, Chris, like you come from traditional markets, like sub billion dollars, like there's a gajillion companies. >> Yeah. >> Um, you need to be closer to 10 billion. So the third is that they have to take action and either they can try to consolidate with each other to get bigger. >> Yeah, >> they could convert to an ETF uh so become an investment company and then convert to an ETF and suddenly they won't trade at um a discount. They could start dividending all their yield and if they're right sized on expenses um that that works too. But you know a a proper debt like Micro Strategy and Bitmine you know they're not trying to just be stable with their holdings. They're trying to grow uh accretively their crypto holdings per share and you know even Micro Strategy has has managed to you know raise a couple billion dollars in the past month. >> Yeah I think the the right the debts that are well managed and and you know expect for these days to come. I mean we've been in finance forever. You always end up in the tail. Something always happens and you need to be prepared. So, the folks who can weather this storm, I think are going to be really well positioned. So, so how long do you think, Tom, until um M&A really hits this space? I mean, it seems as though those companies you're talking about that didn't quite make it um it's going to be M&A season here in the DOT space. You think that's that's on the horizon? >> Yeah. Uh it has to be, Chris. So, um you know, the DATs the fact that there's a lot of debts flailing doesn't surprise me because that's capitalism, you know. So, um, >> yeah, >> today there's only 3,000 listed stocks, the 3,500, right? Or I don't know, 42. I mean, Russell Wilshshire 5000 is no longer 5,000 stocks, but >> um, but there's been like more than 40 45,000 IPOs and spin-offs since 1970. In fact, that that Statam sighting ended at 2015, so there's probably close to 55,000 And in our study that we did at Fundstrap, 90% of IPOs and spin-offs fell 90%. And of those, half of them went to to zero. So meaning most companies fail. And so what we're seeing in that world, just like in crypto, is that this Darwinian process is happening very quickly. Um, but in order for mergers to happen, it's the seller has to become realistic. That's I think the problem because a seller would say, >> yeah, >> well, in June I was just at this price. Why do I have to sell now? So, I think that that's the sobering of that process is what is probably what's holding up M&A because of of course there's plenty of buyers out there. Um, but you know, one of the tricky things is, you know, someone who's trading at a premium to NAV is not going to want to pay a premium to NAV of another company. >> Yeah, 100%. >> Uh, trading at 7 because that's offering a massive premium. Um, so so they're it's really just the bid ask is probably the biggest impediment. >> You know, we have the Fed coming up. It looks like they're now going to cut after like they weren't sure. Now it looks like where they're going to cut. I mean I'm tracking Poly Market, but you know, how do you see this macro setup? Um it looks like sentiment is like terrible right now in the space. Macro seems to be kind of getting better. Um when it comes to the rates outlook, I would say medium to long-term between regulatory de-risking. It's actually a really good setup for DATs, particularly where the MNAVs are right now. Um this I guess really my last question here is how do you see macro impacting you in the space? Uh yeah, macro is actually really a big deal, Chris. Um you know, crypto was the first really to sniff out like and it's going to be responding to a a Fed, right? And if the Feds remains hawkish and executes policy error, you know, that's bad for crypto prices. Um that's why um it's really important for uh anyone involved in crypto understand that what the Fed's going to do uh is a big deal. I think the Fed has is in a very difficult spot because if there wasn't what was what looks to be as political interference, I think the Fed would be cutting uh without question now because um bond market is showing future inflation expectations are falling and that means that if the if monetary policy doesn't adjust its real rates are getting tighter. We're actually putting more tightening into the economy. But as you know, um, the Fed has to make sure its actions don't look like they've been politically driven. >> Yeah. >> And that not just the market's perception, >> right? Because there people tend to think of it as, oh, well, this is the bond market or stock market's conclusion. That's not really what I think that what the Fed's concerned about. It's really the the integrity organization. you know, they have 30,000 or more employees and each of them is seeing this relentless attack from the White House. So, I I think to the extent that the Fed governors and the voting members know that it's the morale of the institution that's at stake, so this is why the Fed is even more guarded in their actions and much more deliberate in their messaging because they don't want anything they do to look politically motivated. And and unfortunately that's been bad for markets because the markets have interpreted that as the Fed is is hawkish. And I mean they do sound hawkish. So um I I think it means that there's going to be an alignment later in later months when inflation is fallen enough and the Fed can now make cuts where it's no longer viewed as politically motivated. >> Right. So they need a little more overhead cover. Awesome. Really appreciate it. Any last thoughts, Tom, before we let you go and get get back after it? >> Uh, well, you know, it's just uh just I think for anyone who's involved in crypto for a long time knows this and so there's many who are new, but crypto has declines and we're not necessarily in a bare market and it feels terrible. In fact, uh that that's what you have to be mindful of is that it's a hypervolatile space. So, it feels terrible now, but just like in 2024, crypto felt terrible for many months and then we've had these big moves. >> Yeah, you have the meltdown then you have the meltup. Um volatility works in both directions. Uh before I let you go, uh any uh price targets for ETH? Yeah, I think well uh in the near term you know there is downside maybe to 2500 but that that's minor compared to the upside of of trying to discount a super cycle. So we think ETH can be 7,000 9,000 by the end of January and that's that's a huge recovery move but that's also pretty typical of what could happen in the fourth quarter. >> Well I I hope you're right sir that would be music to my ears. Um really really appreciate you coming on and uh I learned a ton today. Um ladies and gentlemen, Tom Lee, uh founder of Funstrat and the chairman of Bitmine. Thanks again, Tom. >> Thanks, Chris. Really appreciate it. >> Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.comfree. With markets hitting all-time highs, now is a great time to stress test your strategy and be prepared for what comes next. Thank you all for watching. We'll see you again next time. [Music]