BTC hits a new high, ETH rebounds strongly, and there is a surge of institutional capital, along with the rapid development of tokenization and stablecoin payment networks.
Compiled by: Deep Tide TechFlow
Guests: Tom Lee, Chairman of BitMine; Arthur Hayes, Co-founder and former CEO of BitMEX
Host: David Hoffman
Podcast Source: Bankless
Original Title: Tom Lee & Arthur Hayes: How Crypto Flips Wall Street
Release Date: October 14, 2025
Key Points Summary
In this episode, Tom Lee and Arthur Hayes discuss how cryptocurrency is disrupting Wall Street, including BTC hitting a new high, ETH rebounding strongly, and the influx of institutional capital, tokenization, and the rapid development of stablecoin payment networks.
During the discussion, Tom shared BitMine's large-scale holding plan for Ethereum (ETH) and predicted a price target of $200,000 to $250,000 for Bitcoin (BTC) and a target price of $10,000 to $12,000 for Ethereum. Meanwhile, Arthur provided an in-depth analysis of the cyclical patterns in the crypto market, market liquidity, and why perpetual contracts outperform traditional leveraged ETFs. He also suggested that there could be conflicts between prediction markets and traditional finance (TradFi). Additionally, they discussed how banks are gradually transforming into on-chain technology companies and the profound impact of Tether's rapid rise on the new banking system.
Highlights
By the end of 2025, Bitcoin will reach $250,000, while Ethereum will reach $10,000.
Essentially, the so-called "four-year cycle" does not exist. We are in a new cycle, the core of which is the U.S. Treasury's reverse repurchase program.
One of BitMine's goals for 2026 is to further increase its holdings of Ethereum and participate in staking; Tom Lee hopes BitMine will hold 5% of ETH.
Arthur Hayes hopes to see 24/7 trading of perpetual contracts covering the stocks of the seven major tech companies in the U.S. by 2026.
ETFs are the worst investment tools; never buy leveraged ETFs. If you need leverage, trade futures contracts directly.
We are in an extended cycle that may last until 2027 or 2028, when a change in U.S. administration could bring new changes to the market.
Bitcoin and Ethereum have a complementary relationship; Bitcoin is a currency, while Ethereum represents computational power.
Ethereum should aim to surpass companies like Nvidia or TSMC, becoming a more valuable presence in internet and AI infrastructure.
Tether is a typical growth company; a $500 billion valuation may even be underestimated.
Centralized platforms often face greater risks. In fact, the more we utilize public blockchains for transparency and finality of transactions, the safer the system becomes.
BTC Sets a New Historical High
David Hoffman:
The current market is truly exciting. You just returned from the globally renowned blockchain industry event Token 2049, and everyone is digesting and reflecting on the information from the event. However, as we record this episode today, Bitcoin has set a new historical high, reaching $126,000! Tom, what are your thoughts on the current market as Bitcoin's price continues to rise and break new highs?
Tom Lee:
It is indeed exhilarating to see Bitcoin set a new historical high, especially as we enter the fourth quarter. Compared to the adjustments at the $90,000 level, the current trend is clearly healthier. We are in a seasonally strong phase, and the Federal Reserve is gradually easing monetary policy. Bitcoin's new high is not just a market signal; it is a confirmation. I believe that we are only at the beginning of October, and there is potential for further market increases before the end of the year.
David Hoffman:
Bitcoin's market dominance peaked last quarter but has since declined. However, Bitcoin seems to be attracting the main liquidity in the market right now. Many other tokens' dollar prices remain unchanged or even decline. In other words, Bitcoin's strong performance seems to be "squeezing" the market space of other tokens. Arthur, how do you view the current market state, especially the relationship between Bitcoin and other tokens?
Arthur Hayes:
Yes, that is usually the case. Bitcoin is typically the leader; its performance often leads the way, and other tokens follow suit afterward. Of course, everyone hopes that the tokens they bought back in 2013 will appreciate significantly, but the market needs time. If the overall market can rebound quickly, I believe many quality tokens will also see significant price increases. So, I remain optimistic about the upcoming market trends.
DATs Market
David Hoffman:
Arthur, how do you view the overall state of the current market? I want to hear not only about the internal dynamics of Ethereum (ETH) but also your thoughts on the entire Debt Asset Tokens (DATs) market. For example, MicroStrategy has performed very strongly, and BitMine's MNAV is also positive. However, as we look further, other companies' MNAVs are starting to show signs of compression. While I wouldn't necessarily call it trading, there is indeed a sense that the market's vitality is waning.
Arthur Hayes:
As an investor, when we look at these charts, it is easy to see that these products are no longer "sure-win" trading varieties. Therefore, the market has become more cautious about some highly subscribed products, which aligns with a power law distribution, where a few top companies account for the majority of trading volume (about 80%), while others struggle to maintain. I believe that as market risk preferences change, projects using these financing tools will become riskier in the future. For traders like me, this is actually quite attractive because I enjoy trading complex derivatives.
Overall, the market will gradually stratify. Companies like BitMine are in a favorable position because they can attract funds through simple equity financing, which directly boosts their stock price and allows them to hold more Ethereum per share. Of course, some other companies may issue very complex or even obscure products, such as highly leveraged financial instruments, which may have management fees as high as 20%. These products often disappoint investors in the later stages of market cycles.
I launched various leveraged ETFs in Asia and continued for five years. When my boss explained to me how these products were constructed and the mathematical logic behind them, I thought: Why would anyone trade such products? They are the worst investment tools; never buy leveraged ETFs. If you need leverage, trade futures contracts directly.
Products like ETFs have a "negative gamma effect," meaning their structure leads to the gradual erosion of investors' capital. Additionally, if options are layered on these negative gamma products, investors' returns will be further weakened. But that is the nature of the U.S. stock market, which is somewhat like a casino. Similar situations have arisen in the crypto market, where some products are designed even more irrationally.
David Hoffman:
Tom, should we be surprised by such developments? Or is this just a natural result of the evolution of the DATs market?
Tom Lee:
If we ignore the context of the past four years, I might have a different view. But over the past four years, the crypto market has been almost excluded from traditional capital markets, and many companies have struggled to establish partnerships with banks. So I believe that by 2025, there will be a significant amount of capital waiting to be released in the market. This year, some of the most popular IPOs have actually been companies related to cryptocurrency, such as Circle, Figment, and Bullish. These IPOs have all been hugely successful.
Moreover, the profitability of stablecoins is actually much higher than traditional banking operations. Crypto-native business models can achieve higher profits with fewer employees. Therefore, investors do need to find opportunities to access these emerging asset classes. However, as Arthur mentioned, leveraged ETFs are not ideal products in the crypto industry. These tools are primarily designed to capitalize on market volatility, and we hope they do not make it more difficult for investors to profit. We want investors to achieve positive returns when engaging with the crypto market, rather than suffering losses due to these complex products.
Four-Year Cycle
David Hoffman:
Bitcoin has seen slight increases for three consecutive years, and from the price trend, it has not formed a typical "parabolic" shape, nor have there been signs of a bubble. If we speculate according to the so-called "four-year cycle," the next few months (like November, December, or January next year) could be the peak period for the market.
I would like to hear your thoughts, especially Tom, do you think the concept of the four-year cycle is still applicable? If the market has shifted from a four-year cycle to a longer cycle, why do we still mention the term "cycle"? How do you view the cyclicality of the crypto market?
Arthur Hayes:
I have been thinking about this issue recently; essentially, I believe the so-called "four-year cycle" does not exist. The cyclicality of the market depends on various factors and will continue until certain conditions change. In the past, we have indeed seen three distinct cycles: 2009-2013, 2013-2017, and 2017-2021.
I analyzed the effective federal funds rate and created a proxy indicator for a dollar credit index that reflects changes in deposits, liabilities, and Federal Reserve reserves in the U.S. banking system. This can effectively reflect the impact of quantitative easing (QE) or tightening (QT) policies on the market. Additionally, I analyzed China's credit data because the economic policies of China and the U.S. are often interconnected, sometimes complementary and sometimes opposing. Therefore, I referred to Bloomberg's China credit change index.
In the first cycle (2009-2013), the birth of Bitcoin can be seen as a response to the global financial crisis. The release of Bitcoin was almost simultaneous with the Federal Reserve's announcement of unlimited quantitative easing, while China also initiated the largest infrastructure construction and credit expansion in history. Data shows that the expansion of dollar credit in 2009 was almost "unlimited." This credit growth gradually pushed Bitcoin's price up, peaking in 2013. By 2013, the Federal Reserve began tightening monetary policy, leading to "taper tantrums" in the market and a slowdown in China's credit growth. Although credit continued to grow, the momentum was insufficient, ultimately triggering the burst of the first crypto bubble.
The next cycle was the ICO (Initial Coin Offering) bubble of 2017. In 2015, China again launched a large-scale credit expansion, which fueled the boom in the Shanghai stock market and laid the foundation for Bitcoin's rise. However, by 2017, the U.S. began raising interest rates, and China's credit growth slowed again, leading to the burst of the Bitcoin bubble.
The third cycle is closely related to the COVID-19 pandemic. During the pandemic, the U.S. government issued a large number of stimulus checks, and China also increased credit issuance. These factors collectively drove Bitcoin to reach an all-time high in 2021. However, as the Federal Reserve began discussing tapering its balance sheet and raising interest rates at the end of the year, the market peaked in November.
Now we are in a new cycle, the core of which is the U.S. Treasury's reverse repurchase program. In 2022, Yellen injected $2.5 trillion in liquidity, but this program has now largely ended. If you believe in the theory of the "four-year cycle," then you need to pay attention to the current liquidity situation. Currently, the Federal Reserve has begun to cut interest rates, and figures like Trump are discussing how to stimulate the economy, which may mean the Fed will continue to increase the money supply. Additionally, the American public has accumulated a significant amount of home equity in the real estate market, and Trump plans to release this capital for consumption or investment by lowering mortgage rates.
China's credit policy has fluctuated significantly in recent years, but recently it has also been signaling a revival of the real estate market. While the strength will not be as robust as in 2015, it will not be as weak as after the pandemic. Therefore, compared to previous cycles, this cycle has different characteristics. If we observe the credit data from both China and the U.S., we find that there are currently no obvious signs of a "four-year cycle." The more likely scenario is that we are in an extended cycle, which may be related to changes in the global economic landscape. I believe this cycle may last until 2027 or 2028, when a change in U.S. administration could bring new changes to the market. At that time, investors may begin to reassess risks and adjust their investment strategies. This is my view and serves as a preview for my upcoming paper.
David Hoffman:
Tom, how do you view the current market situation? Do you agree with Arthur's perspective?
Tom Lee:
I completely agree with Arthur's view; he has integrated many important factors. I would like to add two points. First, in terms of market sentiment, the enthusiasm in the market in 2017 was far greater than in 2021. This is evident not only in the crypto market but also in the stock market. I believe this is related to the controversies of the Trump administration and the decline in the stock market from February to April this year, which has led to a relatively low market sentiment. We have observed this in our research at Fundstrat.
Second, a key point mentioned by Arthur is that the crypto market needs to send clear signals to different political camps in the coming years. We do not want the policy environment for the crypto industry to undergo drastic changes due to a change in administration. This is actually a very important policy issue.
David Hoffman:
Yes, crypto is a technology and should not become a tool for partisan disputes, just as the internet is not a partisan issue, crypto technology should not be either. But at the same time, Tom, as an industry, we have made tremendous progress over the past two years. For example, BlackRock has begun to actively engage in the crypto space, launching two major ETF products and tokenization solutions. Moreover, many other institutions are building products in the crypto space. These changes are quite significant compared to the Biden administration.
Therefore, I am indeed concerned about the policy fluctuations in Congress, but I also believe the industry has established a certain foundation. What do you think?
Tom Lee:
I agree with your perspective. At the same time, I believe the crypto industry can also play a role in some issues that are important to Democrats, such as Universal Basic Income (UBI) or social policies. In fact, the implementation of UBI may require support from blockchain technology, as blockchain can ensure the transparency and finality of transactions. Therefore, I believe crypto technology is also attractive to non-Republicans.
ETH Performance and BitMine
David Hoffman:
Tom, the last time you were interviewed by us, BitMine held 0.5% of the total supply of Ethereum (ETH). Today, your holding ratio has grown to 2.25%. How did you achieve this?
In the cryptocurrency space, Bitcoin (BTC) developed three years earlier than Ethereum, but now Ethereum's rapid rise is largely driven by BitMine. How were you able to accumulate so much Ethereum in such a short time?
Tom Lee:
Yes, it has been 12 weeks since our company was established. We completed our initial financing on July 8, and today marks about 12 weeks. BitMine has received strong support from both public and institutional investors, which is why it has become the 28th largest traded stock in the market, and today's trading volume may have entered the top 15.
First, this stock has generated significant attention among the public and has attracted a large number of institutional investors. These factors have driven the growth of BitMine's Ethereum holdings. Notably, Cathie Wood's ARK fund has entered the top 10 in holdings. She manages a very large asset scale. Additionally, due to the high volatility of this stock, it has now become the eighth largest traded options chain. Recently, leveraged ETFs have also been launched, such as the 2x leveraged BitMine ETF, which further enhances liquidity.
So we feel that liquidity is very ample. Together with MicroStrategy, BitMine has become a representative of treasury companies in the cryptocurrency space. MicroStrategy has always been an OG in the crypto treasury field. Together, our two companies account for 86% of the trading volume of hundreds of crypto tokens globally.
David Hoffman:
The Ethereum ecosystem seems to be reviving, especially evident in the crypto community. Before BitMine began large-scale purchases, the Ethereum ecosystem had experienced a period of stagnation.
How do you view BitMine's role at this moment? Now that Ethereum's momentum is increasing and prices are rising, the overall atmosphere of the ecosystem can be said to be rejuvenated. Tom, how much "credit" do you take for this? Do you think it is luck or strategy?
Tom Lee:
I believe this is the result of multiple factors working together. First, the new U.S. government has been more friendly towards cryptocurrencies, creating a favorable policy environment for the market. Second, the widespread use of stablecoins has greatly boosted activity and interest on the Ethereum network. Third, the Ethereum Foundation's strategic adjustments have also been crucial; they have become more focused on market demand. For example, at the Token 2049 conference, we had in-depth discussions with the Ethereum Foundation, confirming that they are working hard to upgrade Ethereum to be more suitable for capital markets and AI applications. Finally, I believe BitMine's involvement has also helped enhance the market narrative and confidence in Ethereum. So, I think these four factors have collectively contributed to the current situation.
BitMine Target Holding of 5%
David Hoffman:
Tom, you have now achieved nearly half of your target, with a holding ratio close to 2.5%, while your ultimate goal is 5%. I feel that your speed in achieving this goal has exceeded everyone's expectations. When I first heard about your plan to allocate 5% of your funds to BitMine, I thought, "Of course, that makes sense." But it is surprising that you have already reached halfway. So I believe no one would question your intention or feasibility in achieving this goal.
So, assuming you really reach 5%, possibly this year or next, will you stop at this ratio? What strategy will you adopt afterward?
Tom Lee:
5% is a symbolic target. When we set this goal, we mainly considered what level of holding ratio should be achieved that would neither negatively impact the entire ecosystem nor bring significant positive effects. We believe 5% is a balance point. However, we have also consulted other researchers' opinions, especially analyzing market competition dynamics from the perspective of power law distribution. I believe that in certain cases, raising the holding ratio to 10% is also feasible and would not cause substantial harm to the ecosystem.
As you know, the essence of DAT (Digital Asset Treasury) is to hold Ethereum as a long-term asset class. Therefore, this mechanism actually provides stability and balance for the entire network. So, I think it is possible to exceed a 5% holding ratio, but we still need to achieve the 5% target first.
David Hoffman:
Arthur, what do you think? Do you believe Tom can achieve this goal?
Arthur Hayes:
I believe that if Tom can attract institutional investors interested in DAT, especially in the current market environment, it is entirely possible. Many investors have now become "momentum investors," and their strategy is to chase the best-performing assets at various stages of the capital market, especially during trading phases. After all, the way to keep a job is to invest in assets that performed well last month.
Recently, Ethereum's price performance has been very strong, and DAT, as an emerging investment tool, has also attracted increasing attention. I guess Tom's investors must be very busy right now; they may be promoting DAT products to potential clients through various channels and trying to raise funds from those clients who have rekindled their interest. These clients may have been disinterested in investing two months ago due to the market's lackluster performance, but now their attitudes have changed.
Tom's Involvement with Ethereum
David Hoffman:
Tom, you are now the largest holder of Ethereum in BitMine, and the 5% target is beginning to establish a closer relationship between BitMine and the Ethereum ecosystem. You mentioned that BitMine would become the "ballast" for Ethereum, and I also noticed that you recently took a photo with Vitalik, which I found very interesting.
Given your position in the Ethereum ecosystem, have you met with other relevant individuals, such as members of the Ethereum Foundation or other stakeholders? How are you integrating into the Ethereum ecosystem?
Tom Lee:
We have indeed had in-depth discussions with the Ethereum Foundation. The Ethereum Foundation is an excellent organization, and our conversations have been very smooth, especially with Tomasz's impressive performance. We hope to help bridge the needs of traditional finance and capital markets while also helping the Ethereum Foundation better understand these needs and regulations.
As a large holder of Ethereum, we have the opportunity to be at the core of these discussions, which is very important. We have communicated with many core developers and had good meetings with Vitalik. While I don't want to overemphasize this role, BitMine's significant holdings of Ethereum assets do play an important role in terms of liquidity and scale. As a result, some in the community refer to us as "kingmakers."
We are also exploring how to promote the development of some DeFi projects while making selective investments. We plan to allocate about 1% of our balance sheet (currently around $130 million) for investments, whether in crypto-native projects or traditional ones, such as our previous small investment in Eightco (Worldcoin reserves).
I believe that BitMine is gradually being seen as not just a DApp, but as a form of digital infrastructure. This aligns with our initial theory of providing network security through staking Ethereum. Of course, the role of large Ethereum holders goes beyond this. I think we are also informally helping to optimize and spread the narrative of Ethereum, which is very helpful for traditional finance to understand blockchain technology and choose partners. I feel that BitMine plays a role as a non-foundation entity, connecting the worlds of traditional finance and blockchain.
David Hoffman:
Recently, there have been rumors or speculations that BitMine might participate in Ethereum governance work, such as core developer meetings or protocol design. Would you consider getting involved in these detailed technical tasks, or do you prefer to focus on advocacy, liquidity, and capital formation?
Tom Lee:
That's a great question. I believe that, as a best practice, BitMine is better suited to play a consulting and supportive role in technical development, such as helping to identify priorities. Even serving as a diplomat or liaison, acting as a bridge between traditional finance and blockchain, aligns more with our strengths. After all, we have many connections in traditional finance and the corresponding infrastructure. Therefore, we believe that participating in protocol design is not BitMine's strong suit, and we do not want to overreach our capabilities.
Market Position of ETH
David Hoffman:
Arthur, I would like to hear your thoughts on Ethereum's market position in 2025. You previously wrote an article titled "The $200 Billion Shitcoin," do you think that figure is accurate? Should Ethereum be compared to Bitcoin in 2025, or should it be compared to other smart contract platforms? After all, there are many similar platforms in the crypto space. What do you think Ethereum's comparison should be?
Arthur Hayes:
From a philosophical perspective, I see Bitcoin as currency, while Ethereum represents computational power. This is how I distinguish between the two. Both are very important in the crypto space and are the two largest assets in my portfolio. Therefore, I think they should be compared within this framework. Ethereum can be seen as a reference asset in the computing domain, and you can also compare it to tech companies like Nvidia, Apple, or Amazon. I believe Ethereum's goal should be to surpass companies like Nvidia or TSMC, becoming a more valuable presence in the infrastructure of the internet and artificial intelligence. This is the direction Ethereum should strive for. As for other crypto tokens, they may focus on their comparisons with Ethereum, but I believe Ethereum should transcend these chaotic tokens.
David Hoffman:
Tom, how do you view this framework? Is it reasonable for you to see Bitcoin as currency and Ethereum as a representation of computational power?
Tom Lee:
This perspective is reasonable. Bitcoin and Ethereum are complementary rather than substitutive, which is our fundamental understanding of cryptocurrencies. When we discuss digital currencies and digital gold, Bitcoin is recognized as digital gold, which is why many investors choose to hold Bitcoin. Ethereum, on the other hand, is a network architecture, and we can see Wall Street building various applications on the Ethereum network and integrating it with AI technology.
This is somewhat similar to the situation in 1971, when there were two branches: gold and the dollar. Gold became the center of value storage, while the dollar turned into a synthetic asset, establishing a whole economic system around it to ensure the dollar became the new standard. This is precisely what Wall Street is doing. From the perspective of value creation, both have created value. Gold is now a $2 trillion network, while the equity market formed around synthetic dollars is a $40 trillion asset.
I believe both stem from cryptocurrencies, but they target different markets. Therefore, Ethereum can grow without competing or substituting Bitcoin.
Financial Computational Power
David Hoffman:
I strongly agree with the analogy of Ethereum as the computational power of financial institutions, which are utilizing these computing resources. With the improvement of the regulatory environment, we see more and more financial institutions, especially those with innovative and forward-thinking approaches, entering the blockchain space. For example, BlackRock has launched blockchain-based ETFs and tokenized funds, and companies like Fidelity are also actively participating. Additionally, Stripe has developed its own Ethereum virtual machine blockchain. Today, many leading financial companies are building their applications on blockchain.
Tom, looking ahead, is it possible that blockchain technology will gradually transform the financial industry into a technology industry? After all, the operations of the financial industry are increasingly reliant on technological infrastructure. What are your thoughts on this?
Tom Lee:
This has been our long-standing view and theory. Take JP Morgan as an example; this is a typical case we mentioned in our research at Fundstrat. JP Morgan currently has about 313,000 employees, but if its business were to fully migrate to blockchain, it might only need 20,000 employees to operate with greater efficiency, clearer goals, and a broader vision. Therefore, JP Morgan is likely to transform into a technology company in the future, especially with the support of AI technology. They can replace some human resources through technological investments and utilize blockchain technology to achieve transaction finality and security.
The valuation multiples of banks should change; traditional banks are usually valued based on tangible assets, while in the future, they may be valued like tech companies based on price-to-earnings ratios. Cathie Wood recently pointed out that this shift has already occurred in the retail sector. For example, Costco and Walmart used to have price-to-earnings ratios typically between 15 and 16, similar to ordinary consumer goods companies. However, because they optimized their business processes through technology, their price-to-earnings ratios have now risen to between 35 and 50, even surpassing Nvidia's 30 times price-to-earnings ratio. This change indicates that technology-driven business models can significantly enhance a company's market value.
Tether's Market Cap Reaches $500 Billion
David Hoffman:
Recently, there have been reports that Tether is seeking to raise funds at a $500 billion valuation. If Tether is considered a crypto asset, this would make it the third-largest crypto asset after Bitcoin and Ethereum. Arthur, what are your thoughts when you hear this news about Tether's valuation reaching $500 billion?
Arthur Hayes:
My first reaction is, "Of course, I would choose to go public." Otherwise, they wouldn't need to raise funds at all. I suspect that Tether's founders, Giancarlo Devasini and JL van der Velde, are likely already very wealthy, perhaps on par with Binance's CZ. After all, they hold a significant amount of crypto assets and equity value in other companies. But as Tom mentioned, Tether is one of the most successful banks in history; they have only 150 employees yet generate over $10 billion in net income each year. Compared to using traditional banks, I would prefer to use Tether to pay for ski lessons in Argentina; the cumbersome processes of traditional banks often leave one feeling exhausted. With Tether, I can easily complete transfers just by logging into my wallet.
Clearly, Tether's role is becoming increasingly important. In the future, the banking industry may transform, either adopting a business model similar to Tether, retaining only a few banks in each major market, or gradually fading into history. Of course, banks, as extensions of national governments, will engage in various political struggles to delay this trend, but technological advancement is inevitable. Just like cars replaced horse-drawn carriages, even though carriage drivers may try to hinder the development of cars, ultimately, technology will prevail. In the next five to ten years, we may see a significant reduction in the number of global banks, leaving only one or two technology-leading banks that can compete with fintech or social media companies. This will be a tremendous advancement, as it can free up a vast amount of human intellectual resources from the constraints of traditional banking.
David Hoffman:
Tom, did Tether's $500 billion valuation surprise you? Or do you think it's reasonable? What are your thoughts?
Tom Lee:
I think it's reasonable. It's important to note that the valuation here refers to the equity value of the Tether issuing company, not the market cap of Tether tokens. Tether has played the role of a "central bank" in the cryptocurrency space. Looking back to 2017, their model was very innovative and forward-looking; they were not only holders of Bitcoin but also established a business model similar to that of a central bank. In fact, many crypto platforms, like Binance, might not have been able to develop without Tether's existence.
In recent years, Tether's circulating supply has continued to grow. As the cryptocurrency ecosystem expands, Tether's utility is also increasing. Even as the regulatory environment gradually improves, Tether's growth rate remains astonishing. Therefore, I believe that Tether is a typical growth-oriented company, and a $500 billion valuation may even be an underestimate.
We should consider a question: Is it possible for Tether to surpass JP Morgan, one of the largest banks in the world? While I don't fully understand Tether's financial situation, based on their growth over the past few years, as Arthur mentioned, Tether is likely to have become one of the best banks in the world.
USDT Surpassing BTC?
David Hoffman:
When we visit CoinGecko, the cryptocurrency data platform, we can see that stablecoins are also included in the market capitalization rankings. Currently, Tether's stablecoin market cap has reached $177 billion, which means the total amount of Tether circulating across all blockchains is $177 billion, while Bitcoin's market cap is $250 billion. Arthur, do you think Tether's circulation could surpass Bitcoin? Is this a realistic possibility?
Arthur Hayes:
I think it's entirely possible. If the U.S. government's policy direction remains unchanged, as the U.S. continues to issue debt, Tether or other similar stablecoins will further expand. In fact, this is precisely the outcome the U.S. hopes to see: a dollar-dominated global financial system while weakening the position of other currencies. Therefore, I believe it is entirely achievable for Tether's supply to exceed that of Bitcoin. Tom, what do you think?
Tom Lee:
I agree with this perspective. If we simply calculate the growth from the current circulating supply of $100 billion to $200 billion, or even $2 trillion, Tether would capture enormous market value. The potential for this growth is significant, which may explain why crypto assets can surprise us. They are transforming into more efficient business models through blockchain technology and gradually changing the landscape of global finance.
Hacks and Vulnerabilities
David Hoffman:
Typically, when people hear about losses due to hacks or vulnerabilities, the first thing that comes to mind are events in the crypto space. For example, a crypto protocol being attacked, or a cross-chain bridge being hacked, or even North Korea obtaining up to $20 billion through these means. Such stories used to be very typical, but in reality, we haven't heard similar news in a long time.
Vitalik recently published an article stating that capital losses in DeFi are actually less than 0.3%. This indicates that the frequency of hacks and vulnerabilities is very low.
Arthur Hayes:
If we look back at some recent major hacking incidents, such as the Bybit case, it was not due to vulnerabilities in the public blockchain itself. It was actually caused by the insecure design and operational failures of centralized entities. Therefore, this supports Tom's point: Centralized platforms often face greater risks. In fact, the more we utilize public blockchains to achieve transparency in processes and finality in transactions, the more secure the system becomes.
Of course, public blockchains themselves also carry certain technical risks. If the blockchain technology you choose is not secure enough, such as those that are not as robust as Ethereum or Bitcoin, you may face various issues, whether based on proof of work or proof of stake mechanisms. However, centralized companies remain the primary source of risk. If we can shift more business to public blockchains, it will help enhance the overall security of the system. This trend is beneficial not only for the crypto space but also holds significant implications for the traditional financial industry. This is also information that corporate executives are gradually recognizing. However, I wonder if they can fully grasp these details. Perhaps it will take the younger members of the tech teams to drive these legacy companies toward transformation through innovative solutions.
Tom Lee:
If we summarize the situation in traditional finance, such as with JP Morgan, we find numerous issues. About 6% of transactions in traditional finance may involve illegal activities or non-compliance, along with issues of merchant fraud. Additionally, the frequent hacking incidents and identity thefts in the retail sector result in losses far exceeding those in the crypto space. More importantly, the blockchains of Bitcoin and Ethereum have never been successfully attacked, further proving the security of public blockchains.
Financial Entertainment
David Hoffman:
Regarding financial entertainment, this phenomenon mainly revolves around prediction markets and also includes projects like Pump.fun, which is a live streaming platform where users can create their own tokens and associate them with Twitch-like live content. Many content creators have produced rich content around Polymarket's contracts, such as "Will Taylor Swift get engaged?" Although the trading volume in these markets is relatively small, the content creation around these markets is exceptionally active.
Tom, I don't know if you've been following this area, and I'm curious about your thoughts. What do you think about the rising phenomenon of financial entertainment on the blockchain?
Tom Lee:
I believe the term "financial entertainment" may underestimate the true value of prediction markets. For example, the Polymarket contracts related to the 2024 presidential election and Trump demonstrate that these markets are not just entertainment; they actually embody the power of collective intelligence. As long as these betting markets do not influence the outcomes through reflexivity, I think their existence is very important. As we gradually move toward an era of tokenized stocks and real-world assets, combining prediction markets with these can actually enhance the liquidity of the financial system and make capital raising easier. This trend could even be described as a form of financial "alchemy."
Arthur Hayes:
The global inflation issue has indeed given rise to a new class of speculators, often lacking sufficient financial assets, comprising 95% to 99% of the total population, whose wage income cannot meet their living needs. Everyone understands this, even if it cannot be proven with specific data. Therefore, they start looking for new ways to increase their income, such as entering the stock market, participating in gambling, or now more popularly, investing in cryptocurrencies. I can use a bit of my savings to invest in emerging hotspots like cryptocurrencies, bubble funds, or even memes, which may be popular today and even more so tomorrow. I would participate, hoping to earn enough money through trading, like those people on social media, to buy a house, a car, or pay off bills. Because the reality is, no matter what I do now or what I want to do in the future, I cannot afford what is considered a "normal life," such as buying a house, starting a family, or living debt-free.
This is not just an American issue; it is a global phenomenon. While it sounds sad, this is the world we live in. Market transparency is something many governments fear because it reveals the true needs of the people, which often contradict the policies and services provided by the government. Projects like Pump.fun and Polymarket are manifestations of market transparency. I have always believed in the power of free markets, but in reality, the U.S. is not a true free market economy; it is a heavily controlled economy. Each country progresses differently in this regard, but the market can provide important signals. For example, if trading activity on Pump.Fund is very active and people are betting heavily on a certain token, it not only reflects the value of the currency but also reveals the shortcomings of global governments in respecting human dignity. This phenomenon can be seen as a philosophical critique of the global financial system, as people have no choice but to turn to these emerging markets.
Perps
David Hoffman:
Perpetual contracts, as a neutral financial instrument, were born in the realm of crypto assets. Do you think perpetual contracts will "reverse" into traditional finance (TradFi) and be adopted? Or do you think perpetual contracts will continue to remain in the futures space of the financial world? I wonder if you have a clear opinion on this.
Tom Lee:
We have already seen some innovative products in the crypto space gradually penetrate traditional finance and be rapidly adopted, with stablecoins being one of the most successful examples. I believe perpetual contracts have many potential advantages. While this is beyond my research area, as I usually focus on cash-settled projects or cash trading, I believe we will see bidirectional innovation between crypto and traditional finance.
We know that products have emerged in the crypto world and penetrated the traditional financial world, and they have been rapidly adopted. Stablecoins are the largest example of widespread adoption. I believe perpetual contracts have many benefits. While this is somewhat outside my area of focus, as I typically concentrate on cash-settled projects or cash trading, there is no doubt that I believe we will see innovation develop in both directions.
Arthur, what do you think? Will traditional finance adopt your favorite perpetual contracts?
Arthur Hayes:
When people refer to traditional finance, they usually mean the U.S. capital markets, rather than the global financial system. I have spoken with many founders who are trying to improve perpetual contracts and hope to enter the U.S. market. However, my advice is that they may need to reassess their path. While you can apply for certain licenses to operate an exchange in the U.S., that is not the real reason why traditional exchanges like CME and CBOE are powerful.
The U.S. clearing system is still based on an outdated model that was originally designed for stock trading in the 1930s, not for modern financial markets, and currently, no exchange can achieve real-time settlement. As for the risks of CBOE and CME, these institutions are capitalized far below the volatility of the products they list and the margins they charge. Therefore, if founders want to introduce perpetual contracts to the U.S. market, they must face a significant challenge—how to obtain a "designated clearing organization license." This license has seen almost no new grants in the past few decades, and currently, there are only 14 institutions in the U.S. holding this license.
If founders can successfully obtain these licenses and continue to use a centralized socialized loss insurance fund model, they can issue high-leverage perpetual contract products without exposing the exchange to additional risks due to outdated clearing mechanisms. These clearing mechanisms often introduce unnecessary volatility, affecting the stability of the exchange. While this topic may be somewhat complex, I hope those founders who want to create decentralized exchanges for perpetual contracts can focus on this direction. If you really want to enter the U.S. market and even challenge the position of CME, that would be true innovation in traditional finance.
Price Targets
David Hoffman:
Today is October 6th, with just over two months and three weeks left until the end of the year. Bitcoin has just set a new historical high of $126,000 today. And what about Ethereum? I hope it can break $5,000 this month. Arthur, what do you think the year-end price range for Bitcoin and Ethereum will be?
Arthur Hayes:
My prediction remains unchanged: Bitcoin will reach $250,000, and Ethereum will reach $10,000.
Tom Lee:
By the end of the year, our price target for Bitcoin is between $200,000 and $250,000. As for Ethereum, my predicted range is $10,000 to $12,000.
David Hoffman:
Tom, don't you think such an increase might be a bit too rapid? If Ethereum really can double in value within two months, that no longer feels like a stable rise to me, but rather like approaching a market peak. I wouldn't want to see that. I would prefer the price to rise slowly and sustain that growth over several years.
Tom Lee:
In fact, Ethereum has basically been in a consolidation phase for the past four years, and now it has just broken through this long-term price range. So I don't see this as the market peak, but more like entering a new price range. To me, this is a manifestation of price discovery. Based on my judgment, there may be many positive fundamental factors driving Ethereum further upward next year. Therefore, this is not the market peak, but an important price level that I believe is very promising for the market.
Vision List for 2026
David Hoffman:
If we look ahead to 2026, can you list a vision checklist indicating the key directions the crypto industry should focus on? Or share your goals at BitMine, or Arthur's plans in trading and writing. What short-term and medium-term goals do you hope to see by 2026?
Tom Lee:
For BitMine, one of our goals is to further increase our holdings of Ethereum and participate in staking, while gradually moving towards the second and third phases of business expansion. We expect to participate in some key projects that will significantly drive BitMine's development. As for the entire crypto industry, I hope to see more innovations in the gambling market and tokenized stocks, as I believe these areas could become highlights in 2026.
Personally, I am not very interested in tokenizing BitMine; I think it is more important to promote corporate tokenization so that we can extract and identify part of the value of the enterprise. For example, I would prefer to see the tokenization of Nvidia, allowing us to trade Nvidia's revenue streams in China or the sales of its Blackwell chips. At the same time, we could use prediction markets to hedge these risks. To me, this is where the true potential of tokenization lies, and it excites me greatly.
Arthur Hayes:
My macro vision list for 2026 is that I hope to see France exit the Eurozone, the European Central Bank injecting billions or even trillions of euros in liquidity by expanding its balance sheet; China re-evaluating its real estate market; the USD/JPY exchange rate reaching 200; the Bank of Japan (BOJ) ultimately yielding and starting massive money printing; and Trump taking over the Federal Reserve and implementing Yield Curve Control.
In terms of crypto products, I hope to see 24/7 trading of perpetual contracts covering the stocks of the seven major tech companies in the U.S. I know there are currently some projects working to develop this market, and I look forward to seeing the successful launch of these projects. This would not only bring new competitive pressure to traditional traders but also allow investors to trade a wider variety of assets.
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