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Fundstrat chief intelligence officer (CIO) Tom Lee believes that crypto’s leading smart contract platform will reach a bottom soon.
In a new interview with CNBC, Lee lays out the case he sees for Ethereum (ETH) bottoming out on value in the coming week.
“Well, Ethereum kind of has several ways that establishes a floor. One is that the value of all the assets locked onto the blockchain. Um, and that number is growing, but historically Ethereum bottoms when that ratio is about 50%. So we’re, I’d say, we’re pretty close to that level. That’s why I think Ethereum probably is bottoming this week.”
However, according to Lee, there is one important aspect of ETH’s price action over the last several years that many traders are undervaluing.
[cont] “But the other way to look at Ethereum is really its price ratio or even its network value ratio to Bitcoin. It currently sits at — this number is 0.032. The long-term average, like the 8-year average, if we were just to trade to that 8-year average, would put Ethereum at around $12,000.
So I think Ethereum is undervalued because number one, the story is gaining relative to Bitcoin this year, but two, we’re getting this sort of intrinsic floor because of the value that the assets locked onto the Ethereum blockchain.”
ETH is worth $2,999 at time of writing, down 16% in the last seven days.
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