Fundstrat co-founder Tom Lee said Ethereum is near a cyclical bottom, arguing that on-chain fundamentals and relative valuation versus Bitcoin indicate ETH is “pretty close to the bottom this week.”
“Personally, I think we’re pretty close to the bottom this week,” Lee told CNBC, linking the current pullback to a broader crypto correction that began after a sharp selloff on Oct. 10. Despite this shock, he insisted that Ethereum’s core investment story remains intact.
Will Ethereum hit rock bottom this week?
For Lee, this story focuses on Ethereum as a neutral infrastructure for tokenization and stablecoins, increasingly relevant as Wall Street ramps up its on-chain ambitions. “There are creations of stablecoins. Larry Fink, BlackRock and Wall Street want to tokenize assets, put stocks, bonds and real estate on the blockchain. And they need to find a blockchain that is neutral and 100% uptime. That’s Ethereum. And that’s the fundamental story,” he said.
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Lee described crypto’s extreme volatility as structurally linked to how the market values long-term innovation rather than a sign of fundamental weakness. “The price, of course, of Ethereum will fluctuate because crypto is hyper volatile. In fact, that’s kind of a… it’s kind of a characteristic of the blockchain itself,” he noted. “Crypto suffered from that October 10 liquidation event, but since the fundamental story is intact and crypto doesn’t factor in the future, that’s why it’s volatile, but it still looks pretty attractive here.”
He placed the current decision in the context of a broader risk-averse environment and continued correction in digital assets. According to Lee, macro data remains a crucial driver of crypto cycles, especially for Bitcoin. “The most correlated factor with Bitcoin prices when you see it… at the top is actually the ISM,” he said, referring to U.S. activity surveys. “So I think we’re still in a crypto correction phase.”
When asked specifically what currently underpins his bullish view of Ethereum, Lee highlighted two “floor” structural mechanisms.
First, he cited the value of assets locked on the Ethereum blockchain. “Ethereum kind of has a few ways of establishing a floor. One is the value of all assets locked on the blockchain, and that number is increasing,” he said. “Historically, Ethereum bottoms when that ratio is around 50%. So I would say we’re pretty close to that level. That’s why I think Ethereum probably bottomed this week.”
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Second, he highlighted Ethereum’s valuation relative to Bitcoin, using both price and network value. “The other way to look at Ethereum is actually its price ratio or even its network value ratio compared to Bitcoin. It currently sits at 0.032,” Lee said. “The long-term average, like the eight-year average, if we were to just trade on that eight-year average, would put Ethereum at around $12,000.”
Based on this, Lee called Ethereum undervalued compared to its historical relationship with Bitcoin. “So I think Ethereum is undervalued because one, the story is winning relative to Bitcoin this year. But two, we’re getting this kind of intrinsic bottom because of the value that the assets have locked up on the Ethereum blockchain,” he argued.
Summarizing Lee’s position, the CNBC host concluded: “Tom Lee says Ethereum is at its lowest this week.” Lee didn’t offer a specific price target or an exact day, but his message was clear: In his view, Ethereum is poised to complete its correction as on-chain value and relative valuation metrics converge toward levels that have historically marked major lows.
At press time, ETH was trading at $3,018.
Featured image created with DALL.E, chart from TradingView.com
