Tom Lee: Four Catalysts Driving ETH's Surge This Year

Source: Milk Road Show

Compiled by: Felix, PANews

Tom Lee, chairman of Bitmine, recently appeared on the Milk Road Show to discuss Ethereum's core position in the financial system over the next five years. Lee pointed out that due to the trend of tokenization and the demand for on-chain transactions driven by AI agents, ETH is currently in a phase of being severely undervalued. He believes that the current market is a "course correction," indicating that the ETH to BTC ratio will see a significant rebound.

PANews has summarized the highlights of the interview.

Host: What are your thoughts on last week's market trends and the recent surge in Ethereum?

Tom Lee: I know everyone has different opinions on this. But our view this year has been that the fundamentals of cryptocurrency have been continuously strengthening. This stands in stark contrast to the past "crypto winter." Previous crypto winters were often accompanied by project failures, capital withdrawals, and shrinking use cases. But this time is completely different. We see that asset tokenization is gaining tremendous momentum. Many prestigious traditional financial institutions are building tokenized products and are particularly favoring the Ethereum platform. Furthermore, with the growth of AI capabilities, there are increasing signs that AI agents do not want to use traditional financial systems, so the crypto track is the most logical choice for them.

Therefore, in our view, last week's surge can be termed a "course correction." Because market prices have finally begun to acknowledge that we should no longer be in a deep crypto winter. As you mentioned, the large-scale liquidations happening in the market precisely indicate how many people were shorting and completely misjudged the situation. As the famous John Russell said, "All rebounds begin with short covering." So we believe this is just the beginning of a larger market trend.

Host: Do you think a pullback will happen? Or has a new round of the crypto bull market already begun?

Tom Lee: I think for those who currently have no exposure to crypto assets or are under-allocated, this is clearly a "tactical" buying opportunity. My advice is, if you look back at past crypto cycles and ask yourself a question: If you were allowed to buy in the 4 weeks before the market bottom or in the 1 week after it, what would you do? The answer is obvious; everyone would unhesitatingly choose to buy within those two windows.

If last week was the bottom, then you are buying in the 1 week after the bottom; if the market pulls back next (which is entirely possible), then you will be buying in the window of 4 weeks before the bottom. In either case, as long as you make a tactical buying decision, you will be grateful to yourself in the future. I believe anyone trying to perfectly predict the market bottom and only buy in the middle of the rebound will ultimately miss out on the vast majority of the gains.

We have published a classic statistic that has been validated for over a decade: Almost all gains in cryptocurrency occur during the 10 best-performing days of the year. If you miss these critical 10 days, your annualized return is actually negative.

So, how many such super surge days have occurred throughout 2026? Probably only 1 day. This means that from now until the end of this year, cryptocurrency still holds tremendous upside potential.

Host: Last week, Robinhood's CEO Vlad Tenev published an article calling for attention to the "tokenization super cycle." What are your thoughts on this tokenization super cycle? What does it mean, and how will it change the financial markets as we know them today?

Tom Lee: I believe the "tokenization super cycle" may be the most accurate and vivid description of the technological transformation currently taking place. Vlad's statement is highly credible because he is a market-validated innovator who has disrupted traditional finance and has personally founded and scaled a company to such a massive size.

Robinhood has brought a disruptive revolution to traditional stock and asset markets, and the most intuitive innovation is, of course, its provision of "zero-commission trading." But what Vlad has truly done right is that he has completely disrupted and reshaped the user experience of finance.

In the past, users had to deal with lengthy and rigid trade confirmations on outdated traditional brokerage apps; when they switched to Robinhood, they could complete trades with just a swipe of their finger, showcasing Vlad's powerful innovative understanding.

Today, our existing financial infrastructure is long overdue for a complete upgrade for the 21st and even 22nd centuries. Today's financial system is an extremely bloated and complex machine: it consists of countless stacked intermediaries, outdated legacy systems, and disconnected networks. Completing a transaction requires various interfaces to connect and massive human intervention.

While many people feel that the current system runs quite well (it does manage to operate at low speed), its speed, error rate, and operational costs are far from comparable to those running on blockchain.

This is the vision Vlad pointed out: If the financial system fully migrates to the crypto track, it will not only release faster and lower-threshold funding channels but, more importantly, it will create unimaginable spaces for innovation.

Because once you can move assets in a purely digital form and at extremely high speeds, many things we have never defined as "currency" will instantly become circulating digital currencies. This is the true nuclear-level release.

Today, one dollar has evolved into a digital dollar through becoming a stablecoin; stocks are also evolving into "software" running on the blockchain through tokenization. Once you turn stocks and currencies into software, we can convert other things that traditionally never belonged to currency into digital money, such as membership points, personal credit, influence, sponsorship rights, and even the discounted value of forward contracts. They were difficult to monetize in the past, but now they will be completely financialized and monetized.

How large of a market can this create? You can calculate like this: today's traditional financial system is extremely large, with over $150 trillion in liquid assets. But such a massive empire is essentially driven by only two extremely singular asset classes: bonds and stocks. All other financial products traded are, without exception, derivatives of these two underlying assets.

Once tokenization is implemented, the potential market we face will no longer be just the $150 trillion stock, but will soar to over $500 trillion. This includes intellectual property, future licensing rights, untapped resources, etc. Therefore, the term "super cycle" is not only not exaggerated but may actually underestimate the terrifying scale of this wave of crypto technological innovation.

Host: As the world rapidly moves towards an era of "AI agents dominating everything on-chain," how can Ethereum maintain and continue to expand its absolute dominance in this ecosystem?

Tom Lee: When facing the future, there are some things we can be 100% certain about, and some things are filled with uncertainty. One thing we can be absolutely certain of is that in the next 5 years, the autonomous capabilities and financial decision-making power of AI agents will undergo a tremendous leap.

Another certainty is that the current traditional financial infrastructure (such as Visa and banking systems) was entirely designed for "humans," and all risk control and multi-level credit approvals are to guard against credit risks in human-to-human transactions. They cannot adapt to the economic activities of AI agents.

But how could AI agents possibly swipe a physical Visa card? Traditional payments require verification through 24 different systems, while AI agents may be executing microtransactions at the level of cents or even fractions of a cent at high frequency, which traditional digital and trading systems cannot accommodate, and the speed of traditional tracks cannot support AI's high-frequency demands. Therefore, they will absolutely not use traditional financial systems.

So, the remaining paths are only two: either use crypto channels (like the Ethereum network) or create a completely new currency system belonging to the world of AI agents from scratch. If AI agents really create their own autonomous currency system, it will be the beginning of a disaster and fear for humanity. Because this means that humans will be completely kicked out of the control chain of the economic cycle. Just imagine, if AI agents trade entirely within their own created closed-loop economy, using their own issued credit media, only occasionally needing to exchange for dollars when purchasing physical hardware or resources from humans, what a chilling future that would be?

Therefore, whether from the perspective of top-level design security or due to government regulatory policies, humanity must be forced to embed itself into the financial decision-making closed loop of AI agents.

Looking globally, today the only thing that can achieve this and provide underlying mathematical rules is the crypto network. We can set hard behavioral boundaries and credit limits for AI agents on-chain through smart contracts, thus granting them financial autonomy while completely eliminating the systemic risks of them absconding with funds.

Host: Why buy ETH every week without fail? Why recently initiate stock buybacks?

Tom Lee: When we founded Bitmine a year ago (June 27, 2025), our mission was very pure: to play the most core and foundational role in the reconstruction of the future global financial system. We firmly bet that Ethereum will become the ultimate settlement layer for future global finance.

We hope to acquire Ethereum shares that are neither too large to lead to centralization of the Ethereum network nor too small to allow us to enjoy substantial network value benefits. After precise calculations, 5% is the perfect golden balance point.

This goal has also received high recognition and support from the Ethereum Foundation and several founders. Because at this scale, Bitmine can serve as an extremely powerful "market stabilizer" for the entire Ethereum network while also guiding and empowering the development of the entire ecosystem in a healthy manner. For example, we have played a crucial foundational role in helping and anchoring a series of external entities split off from the Ethereum Foundation.

The reason we persistently invest weekly is fundamentally based on the premise that Ethereum is still extremely undervalued in our sovereign valuation system. It will not only perfectly capture all spillover benefits from the future migration of finance to blockchain but will also serve as the ultimate firewall guarding human wealth and regulating the behavior of AI agents.

So, what kind of valuation should this bring to Ethereum? For us, the intrinsic present value of Ethereum is far above today's $2,500. Even the previous historical high of around $5,000 still did not reflect Ethereum's true potential.

We can look at a very simple indicator: the price ratio of Ethereum to Bitcoin. Currently, this ratio is languishing around 0.03. At the peak of the 2021 bull market, this ratio reached 0.08. But remember: the underlying driving force of that prosperity in 2021 was merely some air Meme coins and speculative NFTs.

What are we discussing today? It is the "full tokenization" of trillions of traditional assets and the trillion-dollar scale of "AI intelligent finance." Therefore, this time, the exchange rate of Ethereum compared to Bitcoin will not only easily recover the high ground of 0.08 but may even challenge the parity level of 0.25 or even 1:1. This means that the current ETH is practically a chip that can be picked up off the ground.

This is why we buy in without hesitation every week. Through this action, we have effectively forced the market to drain 5% of Ethereum's liquidity, creating a massive "liquidity sediment black hole."

In the future, this large, highly concentrated Ethereum position will release extremely terrifying strategic and ecological barriers: it can be used as seed funding to incubate and encourage a large number of DeFi frontier innovations; in the upcoming next crypto cycle, dozens of unicorn companies valued at billions, built on a new crypto financial track, will inevitably emerge, and Bitmine will have a unique capital advantage to deeply participate in, or even directly establish them.

As for the company stock buyback you mentioned, we previously passed a buyback authorization of up to $4 billion for common stock. When the buyback was just initiated, this fund was even enough to buy back 50% of the company's circulating shares. The core intention behind setting up the buyback was to prevent our company's stock price from deviating excessively from the fundamental value of the company (i.e., the net value of Ethereum represented by each share). When we initiated this program, we found that BMR's stock price was very attractive, and by buying back and destroying shares, we could substantially increase the number of Ethereum anchored by each share.

In the past five weeks, we executed the largest stock buyback in the history of the entire crypto industry: accumulating nearly 20 million shares of company stock in the open market at an average price below $15. Now, our stock price has soared to $26. From any financial dimension, this is a textbook-level successful capital operation.

Host: The Ethereum Foundation underwent structural disassembly this year, evolving into more functionally clear and independently operating external organizations, such as ETH Labs, ETH Systems, and Ethereum Institutional. Bitmine is almost the cornerstone supporter of all these emerging institutions. As a long-term investor, how should one understand this significant evolution of Ethereum's governance structure and ecological landscape? What is the top-level strategy behind it?

Tom Lee: This indeed traces back to a major transformation that occurred within the Ethereum Foundation earlier this year. The Ethereum Foundation had gradually evolved into a large, bloated organization burdened with too many missions. As Ethereum matured, it became unreasonable to cram all these diverse efforts into one basket.

For example, should business development work, such as connecting with large corporate clients, be led by a neutral nonprofit foundation? Or should the foundation act as backend support while establishing dedicated entities in the front to connect with Wall Street? The same reasoning applies to privacy protection technology and cutting-edge technology research and development like ETH Labs. They ultimately reached a very wise conclusion: these functions should be separated and dedicated operational entities should be established outside the foundation. This brings two significant strategic advantages:

First, it allows for the introduction of external collaborations that cannot be realized within the foundation's framework. This includes large external financial institutions, tech giants, etc. Second, it allows a large number of excellent core Ethereum developers to directly hold shares and participate without needing to be stuffed into the nonprofit foundation as employees.

When this historical restructuring occurred, we believed that Bitmine should play the role of a "stability anchor," providing initial support for each independent entity. In our view, some of these entities belong to "public goods investment." Our standard for measuring their success is not based on "how much direct financial return and dividends this entity can bring us." We support it simply because it is an incredibly correct path for the long-term prosperity of Ethereum, enabling Ethereum to stand undefeated in future global competition.

It has been proven that since the establishment of these independent entities, they have won countless beautiful battles in the market. This is undoubtedly a huge success.

Host: From your perspective, how can Ethereum begin to turn its vision into reality? What do you think is the next biggest challenge on the road to this goal?

Tom Lee: What I am about to share mostly belongs to my personal industry observations and opinions and does not represent absolute facts.

I have spent almost my entire career on traditional Wall Street. I know the internal ecology and pain points of these institutions too well. We need to understand a very cruel but extremely critical reality: just because the technology you develop far exceeds existing solutions in scale does not mean that the traditional financial system will adopt it.

When will they show rapid adoption? Only when they see practical, operational, and clearly defined investment return scenarios.

Traditional institutions prefer to deal with organizations that can fully understand and meet their compliance and business needs. I believe that these newly established independent entities (the entities split from the Ethereum Foundation) are fully capable of this because their core team members have been deeply engaged in this institutional market for many years.

A more core point is that these entities understand under what circumstances Wall Street will compromise: that is, this new technology can bring a tenfold improvement to their current business. The crypto track has clearly brought a tenfold leap in technical performance and settlement costs. But we must also ensure that these institutions can immediately see a tenfold return and effectiveness in their financial statements or business profits.

Host: In the remaining time of 2026, what will be the core driving force behind the return of ETH to BTC? Do you think this historic breakthrough can stand firm and continue to ferment?

Tom Lee: I firmly believe that the ETH to BTC ratio will continue to soar in the coming time, and returning to the historical high of 0.08 is just the first target.

I still have strong faith in Bitcoin's long-term prospects. In my eyes, Bitcoin is not just digital gold; its function and efficiency as a substitute asset for gold are far better than physical gold. Bitcoin still has several times of upside potential in the future. However, if we are to write the grandest and most core story of the entire cryptocurrency world in the next five years, this story will certainly not be about digital gold, but about the "super cycle of comprehensive asset tokenization" and the "reconstruction of human wealth by AI intelligent finance."

As Vlad said, the vast majority, if not almost all, of this super wave will occur and settle on Ethereum. This is the underlying logic of Ethereum's inevitable comeback.

Specifically, from now until the end of this year, I believe there are four golden catalysts that will ignite the market:

First, the "Clarity Act" is expected to be officially passed in September. Many people feel that the crypto world does not need regulation. But this act is a "safety net" that is crucial for traditional financial institutions. Once there is a clear regulatory body and black-and-white compliance rules, Wall Street's massive compliance funds can legally and formally establish trillion-dollar businesses on the crypto track. Even if it does not pass, the crypto industry has already proven that it can innovate wildly in the absence of regulation, but this will not prevent it from bringing nuclear-level super support to the market after it passes.

Second, the long-suppressed massive short and waiting funds are flooding in. A large amount of funds had previously been waiting for the so-called October low point due to sticking to the "four-year crypto cycle law." Now, there are only five weeks left until October. Those who were aggressively shorting, holding massive cash, and previously left to speculate on AI concept stocks are suddenly awakening: cryptocurrencies are essentially the core clearing landscape downstream of AI prosperity.

Third, the strong return of international funds represented by Asia. Markets in Asia, such as South Korea, previously chased local stock markets madly, and now they are rapidly turning their attention back to crypto assets.

Fourth, the performance competition among the world's top financial institutions. This is a cold statistical fact: since June 30 of this year, the best-performing asset globally is none other than cryptocurrencies. Ethereum surged 54% during this period, while gold only rose 13%, and U.S. stocks had single-digit gains. Imagine that when the quarterly settlement on September 30 arrives, if Ethereum still tops the global asset return list, then from September 30 to December 30, the entire fourth quarter will see global fund managers erupt in a frenzy of forced buying and position chasing to avoid lagging behind their peers.

Under these four catalysts, the ETH to BTC exchange rate will easily break through the highest level of the year. Even if we make a very conservative and restrained financial valuation, assuming the exchange rate only recovers to 0.04, as long as Bitcoin reaches $150,000 as expected, Ethereum's price will be directly locked at $6,000. Considering that 0.08 is its historical ratio high point, this is clearly an extremely conservative number.