Despite Singapore tightening its cryptocurrency regulatory policies in June this year, the TOKEN2049 conference set a new record. The conference attracted approximately 25,000 participants from over 160 countries, more than 500 exhibiting companies, and over 300 speakers, with tickets being hard to come by.

As the eighth TOKEN2049 conference, although the industry as a whole has matured, there is still significant room for cryptocurrencies to achieve full mainstream adoption. Some interviewees on-site pointed out that achieving this goal requires further optimization of user experience, simplification of decentralized application (dApp) development processes, and addressing the fragmentation of cryptocurrency asset liquidity. Building high-standard institutional-grade infrastructure and high-quality dApps will be key focus areas for the next phase of the industry.

The first day's focus was primarily on Tom Lee's speech. Tom Lee believes that Wall Street is undergoing the largest macro transformation since 1971, with Ethereum expected to be the biggest beneficiary.

Below is a summary of Tom Lee's speech.

Overview of Cryptocurrency Development

I am pleased that TOKEN 2049 is being held in Singapore. I have about 20 minutes to present the slides of my speech, and I hope to leave a few minutes for a Q&A session. My topic is "The Great Transformation of Wall Street Since the Gold Standard."

First, let me introduce some basic information. We have been following cryptocurrencies for about nine years, when Bitcoin was priced at $963. As you can see, Bitcoin has become an "established" asset class, with returns exceeding 100 times. Since then, it has outperformed Nvidia and significantly outperformed gold. During the same nine-year period, gold has only increased about threefold. By the way, Ethereum's performance has even surpassed Bitcoin, achieving a price-to-earnings ratio of 500 times during this period.

From Dollar Decoupling to the Era of Synthetic Assets: A New Era for Wall Street and Blockchain

Next, I want to explain why I believe 2025 will see a significant macroeconomic turning point. Speaking of the gold standard, we need to go back to 1971. In 1971, the US dollar decoupled from the gold standard, and President Nixon announced the end of the dollar's peg to gold. This is worth some reflection. After 1971, the dollar no longer had any real value beyond its own value or payment promise.

When we think about this, most people focus on the gold market of 1971. While gold trading was active at that time, it was not the most important opportunity. In 1971, the financial system suddenly needed to find a way to ensure the dollar's dominance, as other currencies could potentially replace the dollar if it lost its gold backing. Therefore, Wall Street created a massive dollar-denominated market, including money market funds, futures, debit cards, mortgage-backed securities, currency swaps, interest rate swaps, index futures, zero-coupon bonds, asset-backed securities, and more. This was the innovation that followed 1971. In fact, today, seven of the 30 largest companies globally are financial institutions.

And now, another thing is happening: Wall Street is collaborating with artificial intelligence on the blockchain. In the US, the GENIUS Act has laid the groundwork for the development of stablecoins. Subsequently, the US Securities and Exchange Commission (SEC) launched "Project Crypto," bringing Wall Street into the blockchain space. Of course, there are also two pieces of legislation advancing in Washington: the CLARITY Act and the Strategic Bitcoin Reserve Act. This means that by 2025, we are entering an era where more and more things become "synthetic."

Compared to Gold, Bitcoin's Market Value Still Has Significant Upside Potential

Therefore, in our view, Bitcoin undoubtedly still holds a pioneering and important position; it has become a digital store of value. However, it is necessary to consider the issue from another angle: What will Wall Street do? In our view, Wall Street will play a key role in shaping the digital asset market. Ethereum is expected to be the biggest beneficiary.

So, let's delve into what this external impact means for Bitcoin. Suppose the current gold price is $4,000 per ounce and may rise to $5,000 in the future; then it is worth considering Bitcoin's value relative to gold. The so-called gold ratio, which is the ratio of Bitcoin's value to gold, is a key issue. If it is only 10%, then each Bitcoin would be worth $140,000. I think that is too low. I believe its value will be roughly equal to or even exceed that of gold. That is why Bitcoin's value could reach between $1.4 million and $2.2 million. Therefore, we remain optimistic about Bitcoin, which is currently priced at about $110,000.

But let's think about another storyline, which is Wall Street. In the next 10 to 15 years, Wall Street will continue to innovate on the blockchain. Part of this storyline is already visible, which is the stablecoins we are discussing—tokenized dollars. There are some historical events that can be analogized back to 1971. But here we are discussing tokenized stocks, tokenized credit, real estate credit, and even eventually intellectual property, all of which are important metrics in today's economy. I believe that in the future, even intangible assets will be tokenized on the blockchain, such as data collection, royalty payments, loyalty programs, smart contract agents, and even important personal identities.

So, a lot is happening in the cryptocurrency space. We already know that Ethereum has experienced a transformative moment similar to ChatGPT, thanks to stablecoins. Many different companies and institutions are building stablecoin projects. You might wonder why the US government cares about stablecoins. The reason is the same as the US's priority in developing synthetic dollars. The dollar currently accounts for 27% of global GDP but makes up as much as 57% of central bank foreign exchange reserves. This 57% share indicates that since 1971, Wall Street's efforts to establish the dollar as the standard for transactions have been very effective. It accounts for 88% of financial market transactions, you see? Fundamentally, it is almost a stable unit of account.

Therefore, the shift to blockchain-based synthetic dollar tokens could further solidify the dollar's dominance. In terms of overall scale, stablecoins are currently the 12th largest holder of US debt globally. By the way, stablecoins currently hold $280 billion in US debt, and Treasury Secretary Yellen believes this market could grow to $4 trillion. Once stablecoins exceed $1 trillion, they will become the single largest holder of US debt globally. This goal is not unattainable.

It is also worth noting that when companies build businesses on the blockchain, they are essentially redesigning their business architecture, achieving significant operational efficiencies. I believe this is due to various factors. By the way, many may be curious about the role and position of artificial intelligence in blockchain businesses. a16z published an excellent white paper exploring this topic. There are about 11 application scenarios for blockchain AI, and I will highlight a few here, such as the third: forward-compatible identity verification (Proof of Personhood), similar to WorldCoin; the sixth: keeping AI synchronized through coded applications, such as the device I wear, U Critter, which can measure the CO2 levels in your location, ideally at 420, but currently at 980.

We are often asked: What are the benefits of Wall Street building on the blockchain? They might say banks are very profitable. But I don't understand how JPMorgan can become more profitable. In fact, companies that are natively built on the blockchain are inherently more profitable. For example, Tether's financing valuation has reached $500 billion. Look at the list of the world's top 12 banks; Tether ranks second. Imagine: it is 50% larger than Bank of America, twice the size of Citigroup and Morgan Stanley, and even surpasses Goldman Sachs. Interestingly, if you look at the number of employees, JPMorgan, with a market value of $869 billion, has 317,000 employees, giving it a market value per employee of about $2.8 million. Meanwhile, Tether has only 150 employees. It is even smaller than JPMorgan's junior analyst team, roughly equivalent to the size of a new analyst team (assuming they joined in June). This means Tether has an average market value of up to $3.3 billion per employee.

We must recognize this fact: as a native blockchain company, Tether's market value is almost equivalent to that of JPMorgan, but with only 150 employees. Therefore, it is clear that building a company on the blockchain and reshaping Wall Street is highly profitable.

Ethereum: The Institutional Preferred Choice Under Blockchain Transformation

Next, I want to elaborate on why this is beneficial for Ethereum and how to consider digital asset reserves. As mentioned earlier, a key moment similar to 1971 is approaching and is of great significance. Why? Because many Wall Street firms have a need to build businesses on the blockchain and tend to choose neutral public chains as the underlying infrastructure. As you can see, many companies are choosing Ethereum for these operations. In fact, if we look at the locked value of public chains, Ethereum is the preferred choice, accounting for 68% of the total locked value.

Of course, TDL has been the bottom support for Ethereum over the past few cycles. Even companies like SWIFT announced just a few days ago that they will use the Ethereum Layer 2 network for on-chain migration experiments. This shows that companies prefer public chains over enterprise chains. In the AI field, Ethereum is also widely discussed as an ideal platform for building products with chaotic characteristics.

This is Ethereum's price history: since 2018, the price peaked in 2021 and then experienced a significant consolidation period over the past four years. Currently, Ethereum's price is starting to break out of the consolidation range. It is important to pay attention to past consolidation periods; Ethereum soared from $90 to $4,000 after the consolidation period from 2018 to 2020, an increase of over 50 times, with a low of $1,385.

So, what will happen to Ethereum next? I have some thoughts. But back to the price chart, it does not show bearish signals. Another chart worth noting is the price ratio of Ethereum to Bitcoin, currently at 0.036, with an average of 0.047 and a peak of 0.087 in 2021. I think these numbers are important because, in my view, Ethereum is at a critical juncture in 2025, just like in 1971. I believe its price ratio should at least return to the previous peak of 0.087. Therefore, if Bitcoin's price reaches at least $250,000 by the end of this year, Ethereum's price ratio will reach its average of 0.0479. If it reaches the 2021 peak, each Ethereum would be worth $12,000, which I think is reasonable considering the fundamental changes in Ethereum. In this case, each Ethereum would be worth $22,000. However, considering Ethereum's potential, I do not think this is the price ceiling.

Another key milestone is Ethereum becoming the future payment channel, at which point its network value will be on par with Bitcoin, and each Ethereum will be valued at $62,000. As you can see, Ethereum's current value is $4,100, and these three value scenarios all show significant growth potential.

Finally, I want to talk about one last point: if you are interested in Ethereum, why should you consider holding shares in a Digital Asset Reserve Company (DAT)? We currently publish a "Chairman's Letter" on our official website every month. However, due to time constraints, I will only outline the key points so that we can finish in a few minutes and leave time for questions.

The goal of a Digital Asset Reserve Company is to increase the amount of Ethereum held per share. The logic behind this strategy is that it allows for the premium issuance of shares. Do you understand this principle? A very valuable case is MicroStrategy. The company's stock price rose from $13 to $335, demonstrating the impact and potential of this strategy in the market. MicroStrategy achieved this by issuing shares to purchase more Bitcoin. In the five years since MicroStrategy launched this strategy, the price of Bitcoin rose from $11,000 to $108,000, a tenfold increase. This shows that MicroStrategy's asset reserve strategy has yielded investment returns that exceed Bitcoin itself.

BitMine is now also mimicking this model. Notably, the global second-largest Bitcoin mining machine manufacturer, Canaan Inc., is financing faster than MicroStrategy. There are many DAT stocks in the market. Among these stocks, BitMine and MicroStrategy account for 84% of the trading volume. This means BitMine needs a significant amount of capital to rapidly expand its Ethereum reserves. We can observe that the company has conducted Ethereum reserve operations in about nine weeks, increasing the amount of Ethereum held per share by nine times. This growth rate far exceeds the typical growth of Ethereum itself. Therefore, from an investment perspective, if investors are optimistic about the Ethereum market outlook and are interested in investment opportunities related to Ethereum reserves, BitMine stock may provide additional daily Ethereum returns. Of course, this is just one aspect of the investment opportunity, and its potential value goes far beyond that.

Companies participating in Ethereum reserves demonstrate confidence in crypto infrastructure. From a technical perspective, Ethereum adopts a Proof of Stake (PoS) mechanism. By staking Ethereum, companies provide security for the Ethereum network while earning corresponding rewards. In the long term, given the core demand for network security, we believe that anyone involved in cryptocurrency will ultimately choose Ethereum as a key collateral asset, also for similar security considerations.

This is BitMine's strategy: we will actively engage with the community to ensure the success of the Ethereum Foundation and Ethereum developers in decentralized finance, and boldly invest to bridge Wall Street and the cryptocurrency space.

That's about it. We have two minutes left for questions. But before we conclude, I believe the future of cryptocurrency is bright. We believe Ethereum will become the home for many projects.

Now I open the floor for questions.

Question 1: Will there only be one chain surviving in the future?

Tom Lee: I don't think so. Today on Wall Street, there are dozens of different infrastructures and platforms. Even in the exchange sector, there are many large exchanges globally, from the Chicago Mercantile Exchange (CME) to Nasdaq and the New York Stock Exchange (NYSE). I believe the market is large enough. The global GDP is about $80 trillion, with half of the economic activity being financial transactions, equivalent to an addressable market of $80 trillion per year. A significant portion of GDP comes from the flow of intellectual property royalties on-chain, about $20 trillion. If all these $100 trillion of economic activities were conducted on Ethereum, its theoretical value would reach $100 billion. Therefore, there is ample space for Layer 1 public chains targeting specific niche markets, and I believe chains like Solana also have room for development. We cannot be too narrow-minded, nor should we view the current space in isolation; this is a significant advancement.

Question 2: What is the strategy in the face of a very bearish market?

Tom Lee: That's a good question. The essence of the question is: How does DAT survive in a bear market? I believe DAT needs to do two things: First, maintain a clean balance sheet. BitMine has no debt because, in a downturn, equity investors do not want other assets competing with their equity. Creditors will compete with shareholders, and convertible bondholders will also compete. This is why companies with complex capital structures may see their stock prices pressured during economic downturns. Second, the company needs to hold assets in the form of Ethereum per share, assuming a bear market arrives within 12 months. BitMine is increasing its Ethereum reserves daily, so within 12 months, the value of Ethereum per share could rise from $40 to $80. Based on this, even if the future crypto market declines and the company's stock price drops by 50%, it would still be above today's level. Therefore, if DAT companies can continue to increase their Ethereum reserves per share, they will be better able to withstand market downturn risks.

Related: Arthur Hayes: The French Central Bank's Deficit is a "Big Positive" for Bitcoin (BTC)

Original text: “Tom Lee TOKEN2049 Speech Transcript: Wall Street Faces Its Biggest Shift Since 1971, Ethereum (ETH) Could Be the Biggest Winner”

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