In the crypto market, all eyes are now on Ethereum (ETH -1.11%), which is up a head-spinning 50% over the past 30 days. The price of Ethereum is now $3,600, with no signs of slowing down anytime soon.
In fact, Tom Lee, the co-founder of Fundstrat and the chairman of a new Ethereum Treasury Company, thinks a fair price for Ethereum could be as high as $15,000. And he thinks Ethereum might get there by the end of the year. But is he right? Could Ethereum really skyrocket 300% in a span of mere months?
The Wall Street convergence theory
Central to Tom Lee's thesis is the idea that the worlds of Wall Street finance and blockchain finance are converging. Terms like "stablecoins" and "tokenization" are becoming mainstream, and the new crypto policies of the Trump administration have been very bullish for crypto. That would seem to suggest big things ahead for the world of decentralized finance (DeFi), which is a broad, catch-all term for all the new financial products and services that blockchain technology makes possible.
According to Tom Lee, Ethereum is Wall Street's favorite blockchain. It's big, it's global, and it's a name that has been around for more than a decade. Everyone remembers Ethereum as the powerhouse that led the way during the previous crypto bull market rally of 2020-2021.
Right now, Ethereum accounts for roughly 50% of the stablecoin market and 60% of the tokenized assets market, so it's easy to make the case that it is, indeed, the favorite blockchain of Wall Street. Other Layer 1 blockchains have emerged in the past few years, but none have made a significant dent in Ethereum's market dominance. So, on this basis alone, I agree with Tom Lee that Ethereum could be significantly undervalued.
A "ChatGPT moment" for Ethereum?
But here's where things get really interesting. In a recent interview with CoinDesk, Tom Lee suggested that stablecoins could represent a "ChatGPT moment" for Ethereum. Think back to 2022. Nobody heard of generative AI until ChatGPT appeared. Now, nobody can stop talking about it.
Tom Lee thinks the same sort of phenomenon is going to happen with Ethereum, and it will all start with stablecoins. They are the perfect type of use case to demonstrate the power of the Ethereum blockchain.
Image source: Getty Images.
Admittedly, just about everyone seems to have fallen in love with stablecoins this summer. The U.S. government loves them because they could help to solve some major macroeconomic problems. Retailers love them because they could help to eliminate credit card processing fees. Financial institutions love them because they could generate new yield strategies. The number of companies rumored to be launching new stablecoins is almost too big to list, and includes heavyweights in the tech, retail, and financial services industries.
However, things get dicey once you start to talk about valuation. In order to get from $3,600, where Ethereum is now, to $15,000, where Ethereum needs to be by the end of the year, a lot needs to go right.
To make the numbers work, Tom Lee has suggested that Circle Internet Group (CRCL -3.54%), issuer of the USDC (USDC -0.00%) stablecoin, could be a useful valuation comp. In other words, he wants investors to value Ethereum the same way that they are valuing Circle, which went absolutely ballistic after its June IPO.
Can you trust the hype?
Just remember -- in addition to his role at Fundstrat, Tom Lee is also chairman of Bitmine Immersion Technologies, an Ethereum Treasury Company. So, he has a vested interest in talking up the price of Ethereum. People are already drawing parallels between Tom Lee at Bitmine Immersion Technologies and Michael Saylor at Strategy. When was the last time you ever heard Saylor say that the price of Bitcoin was going to fall?
Remember, too, that at the beginning of the year, many people were ready to forget all about Ethereum. The blockchain seemed to be broken, developers were demoralized, and Vitalik Buterin, the co-founder of Ethereum, hinted he might quit. The price of Ethereum fell for the first few months of the year. That is, until the announcement of the first publicly traded Ethereum Treasury Company at the end of May. That's what really kicked off all the buzz around Ethereum.
And, to extend the ChatGPT analogy, there is now a whole host of rival AI projects -- including Grok, Claude, and DeepSeek -- that are arguably just as good, or even better, than ChatGPT. The same thing is true in the blockchain world. Ethereum might get all the buzz, but other Layer 1 blockchains, including Solana, might be just as good, or even better.
That leads me to think that maybe the hype around Ethereum is building to unsustainable levels. While I can easily see Ethereum making a run at its all-time high of $4,891 within the next 12 months, it seems almost impossible that Ethereum is headed to $15,000 by the end of 2025.
