Tom Lee Expects Ethereum to Set a New High
Lee said he expects Ethereum price to break its previous record and move above $5,000 before the end of the year.
When asked whether Ethereum could reach a new all-time high this year, Lee said, “absolutely.” He also said Ethereum could reach around $60,000 within a few years. His estimate is based partly on Ethereum’s previous price cycles.
Ethereum rose from below $100 at the end of 2018 to nearly $4,900 in 2021. Lee said a similar large move following a long period of consolidation could push $ETH to $60,000.
“Could Ethereum 10x above 10 to 12x above its prior highs of $5,000? I think that’s very possible,” Lee said.
He added that Ethereum could reach around $3,000 in the near term and move well above $5,000 before the end of the year.
Ethereum Rallied Despite Fed Rate Hike
The Federal Reserve raised its key interest rate by 25 basis points on September 16, bringing the target range to 3.75%-4%. The decision passed 12-0. Lee said the market’s response was important because Ethereum and other crypto assets continued to rise despite the rate increase.
Ethereum had fallen to around $1,500 in June before recovering to roughly $2,700 by late September. Lee said the move suggests the crypto market may already be entering a new bull cycle.
He also argued that the Fed could eventually move back toward a neutral policy if inflation continues to decline.
Core consumer prices rose 2.4% year over year in August, down from 2.5% in July. Lee said some of the remaining inflation could be linked to areas such as asset management fees and higher prices for flash memory used in technology products.
Based on his team’s analysis, Lee believes underlying inflation could be closer to 2%.
Institutional Money Is Moving Into Ethereum
Ethereum has also seen increased demand through US spot Ether exchange-traded funds. On September 22, US spot Ether ETFs recorded $162.2 million in inflows, marking their third consecutive day of positive flows.
BlackRock’s Ethereum fund accounted for $88.1 million, while Fidelity’s fund added $33.6 million. Lee said the current cycle could attract a broader group of investors than previous crypto cycles.
He pointed to tokenization, changes in crypto regulation and the growing use of blockchain technology by financial companies as factors that could bring more investors into the market.
According to Lee, previous crypto cycles were largely driven by specific areas such as initial coin offerings, NFTs, meme coins and stablecoins. He believes the current cycle has a wider range of potential applications.
Tokenization Could Increase Ethereum Use
Lee said financial institutions are increasingly looking at blockchain technology to tokenize assets and create new financial products.
He said companies are likely to adopt blockchain when it provides a significant improvement in operating costs, revenue generation or customer experience.
Lee pointed to tokenized stocks as one example of this trend.
The Securities and Exchange Commission issued an innovation exemption on September 17 that allows certain tokenized versions of US-listed stocks to trade on blockchain networks under the order.
The development came shortly after the Clarity Act failed to advance in the Senate after a 49-50 vote.
Lee also pointed to longer trading hours being planned by traditional financial exchanges. Nasdaq has announced plans for trading for nearly 23 hours a day, five days a week, while the New York Stock Exchange has received approval for a 22-hour trading day.
Lee said the move could bring traditional markets closer to the always-on trading model used by crypto markets.
Robinhood Builds on Ethereum
Lee also highlighted Robinhood’s decision to build its Robinhood Chain on Ethereum.
According to the information discussed in the interview, Robinhood Chain brought in $2.1 billion in tokenized assets during its first two months, while $1.5 billion was deposited into applications running on the network.
Lee said Robinhood chose Ethereum because of its security and liquidity rather than simply focusing on transaction fees.
“I think that Robinhood decided to build on Ethereum… because it’s the most secure chain and the most liquid,” Lee said.
He argued that Ethereum does not necessarily need to capture all the fees generated by applications built on top of it for $ETH to gain value.
Instead, he sees Ethereum increasingly functioning as an asset that investors and companies hold while the network supports additional financial applications.
