Yesterday, Tom Lee, the founder and head of research at Fundstrat Global Advisors, made a noteworthy prediction in the world of cryptocurrency. In a series of six posts, Lee explained why Ethereum could reach a price of up to $30,000 if companies begin to treat it similarly to how Strategy treated Bitcoin. Notably, Lee asserts that for ETH to reach this figure, it does not need to rely on speculation or delusions about value. The key here is a calculated and cold financial strategy that companies can adopt for sustainable growth.
Strategy: A success lesson not only thanks to Bitcoin
To clarify his theory, Lee cited the example of Strategy, a software company that has seen its stock soar from $13 to $455 from August 2020 to now. Although Bitcoin has contributed significantly to this growth – with BTC price surging from $11,000 to $118,000 – Lee emphasized that much of the price surge of Strategy has not solely come from Bitcoin's rise, but from the smart financial strategy that this company employs.
Strategy has employed a "treasury bond strategy," which means borrowing, issuing more shares, and accumulating Bitcoin at a faster rate than the volatility of this digital currency. Lee argues that this method has created a powerful financial leverage that boosts company stock value in a short time.
Ethereum: Can it replicate the success of Strategy?
Lee believes that Ethereum could be an even more suitable option than Bitcoin for a similar strategy. He points out three financial moves that could help companies leverage Ethereum to increase value:
Issuing new shares with a higher net asset value, thereby attracting more ETH.
Leveraging ETH's volatility to reduce borrowing costs.
Optimizing financial structure by issuing convertible bonds or preferred stocks to limit shareholder dilution.
The strength of Ethereum, according to Lee, lies in its strong volatility. This volatility, if properly harnessed, will help companies not only reduce financial costs but also accumulate ETH at reasonable costs, thus achieving rapid and sustainable growth.
Tom Lee does not stop at theory but also provides impressive real numbers. For example, BitMine Immersion Technologies – the company where Lee serves as chairman – has collected over 300,000 ETH just in the first week, equivalent to nearly $1 billion. This is an astonishing achievement, especially when compared to Strategy's initial Bitcoin accumulation strategy, which took a long time to reach a similar scale.
Equally impressive, SharpLink Gaming, under the leadership of Joseph Lubin – co-founder of Ethereum – successfully raised $413 million and currently owns over 280,000 ETH. This company does not hide its ambition to continue increasing its ETH holdings in the future. Additionally, Bit Digital, another name, has also sold Bitcoin and shares to redirect investments into Ethereum, with a clear goal of becoming the "ETH treasury king."
In total, these three companies currently hold nearly 682,000 ETH, equivalent to about 0.5% of the total circulating supply of Ethereum. This not only reflects a strong investment strategy but also proves that these companies are leveraging financial opportunities to maximize profits from this digital asset, a calculated move to optimize long-term value.
Feedback loop: Sustainable growth
According to Tom Lee, this strategy will create a strong feedback loop: as stock prices rise, borrowing becomes easier and cheaper, allowing companies to acquire more ETH at lower costs. This process not only drives ETH value up but also fosters sustainable growth, as accumulating ETH will become easier as the value of these companies and digital assets increases.
Analyst DCInvestor has succinctly but weightily summarized Lee's predictions:
"Tom Lee believes that ETH could reach $30,000-$80,000. However, some still argue that ETH will only stop at $1,000-$2,000 after peaking in the previous cycle."
Currently, Ethereum is trading around $3,600. If Lee's prediction comes true, the price of ETH could multiply by 8, reaching $30,000. This increase is equivalent to the growth that Bitcoin has experienced since Strategy began accumulating Bitcoin, until it peaked in 2021. However, there is a significant difference: while Strategy took many years to witness that growth, Ethereum has begun to increase in value and trade billions of dollars within just a few weeks.
Although it is still too early to draw final conclusions, what Lee points out is indeed noteworthy. If this strategy is widely adopted, Ethereum could very well become a digital asset with unimaginable value. The shift of companies and the increase in ETH demand could mark a new turning point in the development of the cryptocurrency market.
However, while this scenario could happen in the near future, the big question remains whether Ethereum can maintain this strong growth or will face significant corrections? Time will be the determining factor. But right now, it can be asserted that Tom Lee's forecasts are not fanciful but are indeed a completely plausible scenario.