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07/05 18:40

Tom Lee Says Ethereum Has Untapped Value Potential

Tom Lee Says Ethereum Has Untapped Value Potential

Fundstrat co-founder and chief investment officer Tom Lee said that Ethereum’s current price is vastly undervalued given its potential and infrastructure. In an interview with the Coinage podcast, Tom Lee said that Ethereum’s actual market value could be much higher than its current level.

The Importance of Layer-1 Blockchains

Lee emphasized the core technical role of layer-1 blockchains. He believes that the market value of blockchains like Ethereum, which support many projects and applications, should be assessed in conjunction with their contribution to the ecosystem. Lee believes that Ethereum is undervalued compared to the leading companies in these blockchains.

Circle is one of the active companies in the Ethereum ecosystem, and its stablecoins like USDC and Euro Coin have made a significant impact. These stablecoins were originally developed on the Ethereum network and retain an important position in the Ethereum network.  Circle’s successful listing has received positive market response and significantly increased the company’s value.

ETH Price Valuation Method

Lee suggested that Ethereum’s valuation could be related to the financial multiples of large listed cryptocurrency companies. Specifically, an analysis of EBITDA (earnings before interest, taxes, depreciation, and amortization) valuations shows that some crypto companies have price-to-earnings ratios of nearly 100 times.

Circle’s initial public offering was one of the most successful IPOs in recent memory, and the valuations associated with the blockchain it operates have also risen in tandem. Similarly, Ethereum’s valuation could indicate that it is worth much more than its current price, possibly as much as $10,000.

Lee noted that Ethereum’s market value could rise even further if tokenized assets and stablecoins become more popular.  He stressed that Ethereum's potential will become more apparent as tokenized financial instruments operate on its platform.

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