Fundstrat co-founder Tom Lee says Ethereum is nearing a cyclical low, arguing that on-chain fundamentals and relative valuation to Bitcoin indicate ETH is “pretty close to this week’s low.”

“Personally, I think we’re pretty close to the bottom this week,” Lee he said CNBC, linking the current withdrawals to the broader cryptocurrency correction that began after the edged liquidation on October 10. Despite this shock, he insisted that Ethereum’s basic investment story remains intact.

Will Ethereum Hit a Low This Week?

For Lee, the story centers on Ethereum as a neutral infrastructure for tokenization and stablecoins, which is becoming increasingly critical as Wall Street intensifies its on-chain ambitions. “There are stablecoin creations. Larry Fink, BlackRock and Wall Street want to tokenize assets, bring stocks, bonds and real estate to the blockchain. They need to find a neutral blockchain with 100% uptime. That’s Ethereum. And that’s the basic story,” he said.

Lee described the extreme volatility of cryptocurrencies as structurally related to how the market values ​​long-term innovation, rather than a sign of fundamental weakness. “Of course, the price of Ethereum will fluctuate because the cryptocurrency is extremely volatile. In fact, this is… a feature of the blockchain itself,” he noted. “Crypto suffered from the liquidation on October 10, but since the fundamental history is intact and cryptocurrencies discount the future, that is why it is volatile, but it still looks quite attractive here.”

He placed the current move in the context of a broader risk-free environment and ongoing correction in digital assets. According to Lee, macro data remains a key driver of cryptocurrency cycles, especially in the case of Bitcoin. “The most correlated factor with Bitcoin prices, when you see it… at the peak, is actually the ISM,” he said, referring to US activity surveys. “So I think we are still in the crypto correction phase.”

When asked specifically what underlies his bullish view on Ethereum, Lee pointed to two structural downstream mechanisms.

First, he cited the value of assets locked on the Ethereum blockchain. “Ethereum has several ways of setting a floor. One is the value of all assets locked on the blockchain, and that number is growing,” he said. “Historically, Ethereum bottoms out when this ratio is around 50%. So I would say we’re pretty close to that level. So I think Ethereum will probably bottom out this week.”

Second, he highlighted Ethereum’s valuation relative to Bitcoin, using both price and network value. “Another way to look at Ethereum is its price ratio or even the network value ratio to Bitcoin. Currently it is 0.032,” Lee said. “The long-term average, like the eight-year average, if we were to trade just on that eight-year average, would put Ethereum at about $12,000.”

Based on this, Lee characterized Ethereum as undervalued compared to its historical relationship with Bitcoin. “So I think Ethereum is undervalued because, first of all, the story is trending higher this year compared to Bitcoin. Secondly, we get this kind of internal floor because of the value that the asset is locked in on the Ethereum blockchain,” he argued.

Summarizing Lee’s stance, the CNBC host concluded: “Tom Lee says Ethereum is bottoming out this week.” Lee didn’t offer a specific price target or exact day, but his message was clear: he believes Ethereum is close to completing a correction as on-chain value and relative valuation metrics converge towards levels that have marked major bottoms in the past.

At the time of publication, the price of ETH was $3,018.

Featured image created with DALL.E, chart from TradingView.com