Fundstrat’s Tom Lee Predicts Ethereum Likely To Hit Bottom This Week

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Lee said Ethereum’s valuation metrics, like assets locked on-chain and long-term ratios to Bitcoin, indicate it may be nearing a bottom.

  • Fundstrat’s Tom Lee noted Ethereum tends to bottom when the value of assets locked on the network reaches roughly 50% of its market value.
  • He added that ETH’s price-to-Bitcoin ratio sits near 0.032, below its eight-year average.
  • According to him, these two metrics combined indicate that Ethereum may bottom this week.

Tom Lee, managing partner at Fundstrat and the executive chairman of BitMine Immersion Technologies (BMNR), reportedly said on Monday that Ethereum (ETH) is likely to bottom out this week.

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“I think Ethereum probably is bottoming this week,” Lee told CNBC. He pointed to the value of assets locked on the Ethereum blockchain and its long-term price ratio relative to Bitcoin as signals that ETH may be stabilizing.

BMNR’s stock fell more than 6% in midday trade and was among the top trending tickers on Stocktwits. Retail sentiment around the company on the platform trended in ‘bearish’ territory over the past day, after Ethereum (ETH) – BitMine’s primary treasury asset – was trading at around $3,100, having gained 1.2% in the last 24 hours. 

Despite the uptick, Ethereum’s price is more than 37% below its all-time high of over $4,900, seen in August earlier this year.

Ethereum Approaches Key Valuation Levels

Lee said Ethereum tends to bottom when the value of assets locked on the network trades near 50% of the cryptocurrency’s market value—a level he said ETH is approaching now. 

He also noted that Ethereum’s price ratio to Bitcoin sits near 0.032, well below its eight-year average. A move back to that long-term trendline, he said, would imply an ETH price closer to $12,000.

“We’re getting this sort of intrinsic floor because of the value of the assets locked onto the Ethereum blockchain.”
– <Tom Lee, Executive Chairman, BitMine Immersion Technologies

He added that crypto is “hyper-volatile,” stating that it’s a “feature of the blockchain itself.” Lee reiterated that he’s bullish on Ethereum, citing the increase in stablecoin creation, the tokenization of assets by institutions like BlackRock, and the drive to bring stocks, bonds, and real estate onto the blockchain.

BitMine’s Holdings Near 3.6 Million ETH

Lee’s interview follows BitMine’s announcement on Monday that its treasury currently holds 3.56 million Ethereum (ETH), 192 Bitcoin (BTC), a $37 million position in Eightco Holdings (ORBS), and $607 million in unencumbered cash.

Lee said the broader crypto market has struggled to recover since the October 10 liquidation event. He described the current weakness as consistent with one or more market makers dealing with balance-sheet strain. 

“This is the equivalent of QT [quantitative tightening] for crypto and has the effect of dampening prices,” he said. “In 2022, this QT effect lasted for 6 to 8 weeks. And this is probably happening today.” BMNR’s stock has gained 286% this year.

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Read also: Bitcoin Price Struggles While Crypto Liquidations Top $500 Million – Analyst Flags Retail Pressure

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