Tom Lee expects Ethereum to surpass Bitcoin in AI and tokenization

BitMine Chairman Tom Lee identified BMNR as the most closely related target with Ethereum among U.S. listed stocks, pointing to a correlation of as high as 80%, and predicting that Ethereum will outperform Bitcoin in the current cycle.

Core Summary

In Fundstrat's comparison of 17 large-cap stocks, the correlation between BitMine and Ethereum reached 80%. Li believes that tokenization and artificial intelligence applications will support Ethereum's performance relative to Bitcoin. As of August 16, BitMine held 5.82 million Ethereum pieces, accounting for 4.8% of the total supply of the token. The U.S. spot Ethereum ETF attracted a net inflow of $365 million in July, compared with $205 million for the Bitcoin ETF over the same period.

A report published by Fundstrat on Platform X (formerly Twitter) stated that its research covered 17 companies with market capitalizations of more than US$2 billion, providing stock investors with a list of listed companies closely related to the trend of Bitcoin or Ethereum. The report shows that BitMune Immersion Technologies has the highest correlation with Ethereum, reaching 80%, followed by Coinbase with 74%. Among stocks linked to Bitcoin, Strategy recorded the highest correlation of 78%, and Coinbase at 74%.

Li said he expects Ethereum to beat Bitcoin in the current cycle because tokenization and artificial intelligence applications could create demand for the Ethereum network. In his view, these two uses are more important than the themes that supported Ethereum in the early market cycle. The report did not disclose the time period used to calculate correlations, nor did it say whether Fundstrat measures daily, weekly or monthly returns. Correlations change with prices and market conditions, so these numbers describe relationships in the Fundstrat dataset rather than a fixed association between each stock and its corresponding cryptocurrency.

BitMine shares provide investors with a way to invest indirectly in Ethereum

BitMine topped the list because of its decision to build the world's largest enterprise-level Ethereum reserve. As of August 16, the company held 5,815,164 Ethereum, 210 bitcoins,$78 million in cash and marketable securities, as well as investments from Beast Industries and Eightco Holdings. Based on the Ethereum price of $1893, BitMine values the total value of its crypto assets, cash, securities and other investments at $11.4 billion. The company said its Ethereum holdings accounted for 4.8% of the total supply of 120.7 million tokens and had achieved 96% of its 5% holding target.

In the week ended August 16, BitMine purchased another 9,926 Ethereum units. According to its latest update, the company has been buying Ethereum every week since adopting the Ethereum reserve strategy on June 30, 2025. A previous reserve update on August 10 showed that BitMine held approximately 5.81 million Ethereum after purchasing an additional 7,391 tokens. At the time, the company also bought back 3 million shares of BMNR stock under a $4 billion authorization. The following week, BitMine added another 1.7 million shares to repurchase, bringing the total repurchase volume since July to more than 20.8 million shares. Li said management believes common stocks are undervalued, although this assessment represents the company's view rather than an independent valuation.

BMNR closed at approximately US$22.72 on August 21, up approximately 5.3% on the day. Coinbase rose about 7.5%, Strategy rose about 5.9%, and Bitcoin and several large altcoins also rose over the same period.

Ethereum pledge becomes the core of BitMine model

As of August 16, of the 5.82 million Ethereum held by BitMine, 5,067,309 have been pledged. This amount represents approximately 87% of the company's Ethereum position and is worth US$9.6 billion at the price quoted in the announcement. Based on a seven-day annualized rate of return of 2.61%, BitMine expects this position to generate approximately US$250 million in pledge revenue annually. The company said potential annual rewards could reach US$287 million after the remaining Ethereum is pledged through its MAVAN platform and external partners. Pledges provide BitMine with a source of revenue that Strategy cannot generate from its Bitcoin holdings because Bitcoin does not use a proof-of-stake system. However, BitMine's estimates depend on Ethereum's pledge yield, ETH market price, verifier performance, and the amount of Ethereum the company has invested in pledge.

The company also joined the Russell 1000 Large-Cap Index on June 26, providing U.S. fund managers and benchmark tracking products with another way to gain indirect Ethereum exposure. BMNR is traded on the New York Stock Exchange, while 9.5% of its Series A permanent preferred shares are traded under the symbol BMNP. Compared to spot Ethereum ETFs, BMNR bears risks related to its operating costs, capital decisions, share issuance, pledge activities and other investments, and its market value may also be higher or lower than the value of ETH and other assets held on its balance sheet.

Tokenization supports Li's Ethereum argument

Lee described tokenization as one of the main reasons why Ethereum may surpass Bitcoin. In BitMine's August 17 update, he said the ETH/BTC ratio had risen to 0.02994, breaking through the long-term downward trend. Previously, ETH/BTC analysis showed that the ratio tested resistance around 0.0286 after recovering in July from a low of around 0.026 in early June. This ratio measures how much bitcoin an Ethereum can buy, so an increase suggests that ETH is appreciating relative to BTC.

According to Li, Ethereum's relative increase in the early cycle was due to initial coin offerings in 2017 and 2018, NFTs in 2020 and 2021, and stablecoins adoption in 2025. He expects Wall Street's tokenization and blockchain-based AI agents to support Ethereum's next phase of outstanding performance. RWA.xyz data provides more context for the tokenization argument. As of August 21, the analytics platform tracked 2,267 real-world assets on Ethereum, and RWA transfers reached US$13.99 billion in 30 days, an increase of 20.45%. The same database shows that the market value of stablecoins on Ethereum is US$157.11 billion, with 26.6 million holders, and the 30-day transfer volume reaches US$1.55 trillion. Tokenized asset platforms on the network include Ondo, Securitize, Circle, Tether and Sky.

Wall Street's involvement has also gone beyond the companies that own Ethereum. BlackRock, JPMorgan Chase and several asset management companies have developed or tested tokenized funds, collateral products and settlement services that use Ethereum or its compatible networks.

U.S. Ethereum ETF shows signs of institutional demand

U.S. exchange-traded funds provide another measure of investor demand for regulated brokerage products. The spot Ethereum ETF attracted a net inflow of US$365 million in July, compared with US$205 million for the spot Bitcoin ETF. July's results were the best month ever for the Ethereum ETF, and the first time its monthly inflows surpassed Bitcoin ETF inflows by more than twice as much. On July 23, Ethereum products received US$72.64 million and Bitcoin funds received US$68.99 million. The Ethereum ETF added another $53.75 million on August 4, followed by a net inflow of $202 million in the following three trading days. During July, the ETH/BTC ratio rose by approximately 11%, from approximately 0.027 to 0.030.

Artificial intelligence applications form the second part of Li's prediction. According to Ethereum's website, blockchain-based agents can control wallets, perform transactions, interact with smart contracts, and use stablecoins to pay for access to computing resources, data and applications. The technology is also described as experimental and warns users to exercise caution. Proxy activity does not guarantee the need for ETH, as applications can use other blockchains, layer 2 networks, or off-chain payment systems.

Li sees Robinhood Chain as an example of the convergence of finance and blockchain services. The Ethereum Layer 2 network uses ETH to pay transaction fees and sends final transaction records to Ethereum, while Robinhood reported having 27.4 million funded customers at the end of the first quarter. Within a few weeks after its launch, the network's cumulative decentralized exchange transaction volume was close to US$9 billion, locked in assets of US$431 million, and daily active users exceeded 250,000. More than 80% of its early exchange trading volume came from memes, and temporary fee exemptions reduced transaction costs in the first 90 days of online launch.