Ethereum may be approaching a cyclical low this week, according to Tom Lee, co-founder of Fundstrat. Speaking to CNBC, Lee linked the recent drawdown in Ethereum (ETH) to a broader crypto correction that began after the sharp liquidation event on October 10, 2025.
Despite the price volatility, Lee emphasized that Ethereum’s fundamental investment story remains intact. He noted that the network’s role as neutral infrastructure for tokenization and stablecoins makes it increasingly relevant as institutional interest grows.
Ethereum’s Role in Institutional Tokenization
Lee highlighted Ethereum as the blockchain of choice for Wall Street’s growing on-chain ambitions. Major players, including Larry Fink and BlackRock, are exploring the tokenization of assets such as stocks, bonds, and real estate. Ethereum’s reliability and 100% uptime make it the preferred platform for these applications.
“The value of Ethereum isn’t just speculative—it’s structural,” Lee explained. “Stablecoin issuance and asset tokenization continue to grow, supporting ETH’s long-term relevance.”
Volatility as a Feature, Not a Flaw
Lee framed Ethereum’s price swings as a feature of crypto markets rather than a sign of weakness. He argued that the October 10 liquidation caused short-term volatility but did not undermine Ethereum’s long-term prospects.
“The price will fluctuate because crypto is inherently volatile,” Lee said. “These movements discount future expectations but don’t alter the fundamental story. Right now, Ethereum looks attractive from a valuation standpoint.”
On-Chain Fundamentals Supporting a Bottom
Lee pointed to two key structural “floor” mechanisms that suggest Ethereum is near a bottom:
1. Value of Assets Locked on Ethereum The total value locked (TVL) on Ethereum continues to grow. Historically, ETH tends to bottom when certain on-chain ratios reach approximately 50%. Lee believes the network is approaching that level, providing a foundational floor for price support.
2. Relative Valuation to Bitcoin Ethereum’s price and network value relative to Bitcoin also indicate undervaluation. Currently, the ETH/BTC ratio sits at 0.032, below its eight-year average. Adjusting Ethereum to its historical ratio would imply a valuation of around $12,000, highlighting its relative discount versus Bitcoin.
“These metrics suggest Ethereum is undervalued and structurally positioned for a recovery,” Lee noted.
Broader Market Context
Lee emphasized that macroeconomic factors remain crucial for crypto cycles, particularly for Bitcoin, which often leads broader trends in digital assets. He noted that the ISM activity surveys historically correlate with Bitcoin peaks, and the current market correction is part of a larger risk-off phase.
While the broader market remains under pressure, Lee’s analysis suggests Ethereum could complete its correction this week as on-chain value and relative metrics converge toward historically significant levels.
Implications for Traders and Investors
For investors and traders, Lee’s outlook provides actionable insights:
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Ethereum may be approaching a near-term bottom, presenting a potential buying opportunity.
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Key structural supports include TVL growth and ETH’s undervaluation relative to Bitcoin.
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Short-term volatility is likely to persist, but the long-term fundamentals remain strong.
While Lee did not specify an exact price target or day for the bottom, his analysis points to convergence between technical, on-chain, and valuation indicators that have historically signaled major lows for Ethereum.
Outlook
Ethereum’s near-term price action will likely be influenced by a combination of market sentiment, macroeconomic data, and continued growth in tokenization activity on the network. Investors monitoring ETH can look for signals from TVL growth and BTC-relative valuations as confirmation of a bottoming process.
Tom Lee’s assessment positions Ethereum as a resilient and undervalued asset within the current crypto correction, suggesting that a structural floor may soon support a broader recovery in ETH prices.
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