整理 & 编译：深潮 TechFlow
Guest: Tom Lee
Host: Wilfred Frost
Podcast Source: The Master Investor Podcast with Wilfred Frost
Original Title: Tom Lee: Bear Market Coming in 2026 – Use It As Buying Opportunity
Broadcast Date: January 20, 2026
Key Points Summary
Tom Lee is the co-founder and head of research at Fundstrat Global Advisors, as well as the chairman of the Ethereum financial company Bitmine Immersion, and the chief investment officer of Fundstrat Capital, which manages the rapidly growing Granny Shots ETF series (currently managing assets of $4.7 billion).
In this episode, Tom shares his market outlook. He believes that the decade-long bull market that began in 2022 is still in its early stages, although there may be a sharp market correction this year that feels like a bear market. However, the stock market is expected to see a strong rebound in 2026. He points out that investors need to face three major changes this year: new Federal Reserve policies, a more interventionist White House, and the ongoing revaluation of the artificial intelligence (AI) boom. At the same time, he states that while he remains optimistic about the "magnificent seven" tech stocks, cyclical industries, energy, basic materials, finance, and small-cap stocks may become more attractive investment directions.
The program also discusses topics such as gold, cryptocurrencies, and demographic trends. Tom believes that gold is currently undervalued and reveals that Tether may be one of the largest private buyers of gold at this stage. Additionally, he notes that millennials are rediscovering the value of gold, while the younger generation is more inclined towards cryptocurrencies. He asserts that Bitcoin remains "digital gold," while Ethereum is his most favored cryptocurrency. He also analyzes how last October's deleveraging event caused cryptocurrencies to deviate from gold's price trajectory and predicts that as banks and asset management companies accelerate the adoption of blockchain technology, Bitcoin and Ethereum will see significant increases.
Furthermore, Tom discusses Bitmine's $200 million investment in MrBeast's Beast Industries. He believes that MrBeast is one of the most influential media assets of this generation and states that financial education and Ethereum are expected to be at the core of future products, reaching billions of users worldwide.
Highlights of Insights
Bitcoin will reach a new high this year, hitting $250,000.
Tether has become the largest private buyer of gold.
The magnitude of this correction may be around 10%, but even a 10% correction will feel like a bear market.
Every market correction is a great buying opportunity.
This year, the sectors we are most optimistic about are energy and basic materials.
The banking industry has begun to embrace the efficiency improvements brought by blockchain.
Silver and copper may perform well this year. Copper, as an industrial metal, is closely related to the ISM index. If copper prices rise, I believe it will drive the performance of basic materials stocks.
When we look back at 2026's performance, we will find that this year is a continuation of the bull market that began in 2022.
There are several particularly critical shifts in the market. The first is the new leadership at the Federal Reserve, the second factor is the policy direction of the White House, and the third factor is that the market is still trying to assess the value of artificial intelligence (AI). These three factors combined may lead to a "bear market-like" correction.
Last year, investors often overreacted in the face of escalating tariff negotiations and uncertainty; this year, the market's reactions may be more rational, with expected response magnitudes halved.
The Federal Reserve's interest rate cuts can actually alleviate economic pressure for many Americans.
Once the Federal Reserve chair changes or if there are a few more rate cuts this year, it will be good for the stock market.
In the short term, oil prices may be weak or volatile, but based on the development of data centers and the shift to alternative energy, these factors will drive future oil price increases, so energy stocks can perform well.
Bitcoin is digital gold, but the crowd that believes in this theory does not overlap with those who own gold.
The adoption curve of cryptocurrencies is still higher than that of gold, as there are more people who own gold than those who own cryptocurrencies.
I believe the most important advice I can give to investors is not to try to time the market; those who truly make money are long-term investors.
Cryptocurrencies are being embraced by the younger generation—they have become a part of their lives.
2026 Market Outlook: Corrections in a Bull Market
Wilfred Frost: Welcome to The Master Investor podcast, I’m Wilfred Frost. Today’s guest is the well-known Tom Lee. Tom is the co-founder and head of research at Fundstrat Global Advisors, as well as the chairman of the Ethereum asset management company Bitmine Immersion, and he manages the Granny Shots ETF (a fund focused on technology and innovation investments). It’s a great honor to have you here in London for our show.
Now that it’s early 2026, Tom, I see you have made very accurate predictions about this year’s market trends: the market will have a surge at the beginning of the year, followed by a significant correction, and then a new round of rebound by the end of the year. Does this description accurately reflect your outlook for the market in 2026?
Tom Lee: I believe when we look back at 2026's performance, we will find that this year is a continuation of the bull market that began in 2022, and it also shows characteristics of stronger economic resilience. However, I think the market needs to face several important shifts, two of which are particularly critical. The first is the new leadership at the Federal Reserve. The market usually tests the policies of a new Federal Reserve chair, and this process includes policy identification, confirmation, and market reaction, which may trigger a correction. The second factor is the policy direction of the White House. In 2025, the White House's policies had a significant impact on the technology consulting and healthcare sectors, and in 2026, more industries, sectors, and even countries may become key targets of policy. This change brings more uncertainty, as evidenced by the recent rise in gold prices reflecting market concerns about risk. These two factors may lead to a market correction.
Wilfred Frost: You mentioned two factors; are there any other potential influences?
Tom Lee: Yes, there is also a third factor, which is that the market is still trying to assess the value of artificial intelligence (AI). While we believe AI remains a strong market driver, there are still many questions in the market regarding its long-term potential, energy demand, and the capacity of data centers. Before these issues are further clarified, the market may need other strong logical support, such as the recent rebound in the ISM manufacturing index and the potential recovery of the real estate market as interest rates decline. But these shifts will also bring uncertainty. Therefore, I believe these three factors combined may lead to a "bear market-like" correction.
Wilfred Frost: So what do you think the magnitude of this correction will be? Will it be a 20% adjustment from peak to trough, or something smaller?
Tom Lee: It may be around 10%. But even a 10% correction will feel like a bear market. Of course, it could also reach 15% or 20%, which might bring the market back to the levels seen at the beginning of the year after a strong performance. While we have had a very good start this year, I expect the market may experience a decline at some point during the year, but I believe the final market performance this year will be very strong.
Wilfred Frost: Last August, we talked, and you mentioned that we were at the beginning or close to the beginning of a 10-year bull market. Do you still hold that view? In other words, once the market experiences this correction, would you consider it an excellent buying opportunity?
Tom Lee: I have always believed that every market correction is a great buying opportunity. Last year, due to tariff issues, the market dropped on April 7, and it turned out to be one of the best times to buy stocks in the past five years. Many stocks reached new historical highs and experienced very strong rebounds. So I believe that if the market does indeed experience a correction this year as we expect, it will be a very good buying opportunity.
Drivers of a Long-Term Bull Market
Wilfred Frost: Last August, you mentioned that we might be at the beginning of a new 10-year bull market, and at that time, you believed the reasons behind it included: the surge in the working-age population, the younger generation inheriting significant wealth, and the United States being at the center of many innovative fields (especially AI and blockchain). Are you still confident in these three long-term factors?**
Tom Lee: Yes, in fact, I think these factors now appear even clearer.
First, the U.S. does have a favorable demographic trend, which stands in stark contrast to many countries experiencing a decline in their working-age population.
Second, regarding wealth inheritance, there is now increasing discussion indicating that Generation Z, millennials, and Generation Alpha will inherit considerable wealth during their lifetimes. While this phenomenon may exacerbate wealth inequality, it also means that there will be some very wealthy young generations in the future, while others will gradually accumulate personal wealth through their efforts.
Regarding artificial intelligence, I believe there is increasing evidence that we are moving towards superintelligence. Progress in this area is very rapid, especially in robotics and the integration of robots with other technologies, which will continue to drive America's advantages. As for blockchain, its impact is no longer limited to companies like BlackRock and Robinhood. For example, Jamie Dimon (CEO of JPMorgan Chase) recently publicly stated that he believes blockchain can indeed solve many problems in financial services. I believe the banking industry has begun to embrace the efficiency improvements brought by blockchain.
Wilfred Frost: You still firmly believe in the long-term bull market perspective and think that the market will recover after a correction. So how can we better judge when this initial correction will come? I recently listened to an interview you did on CNBC, where you mentioned that the market usually peaks on good news, which sounds somewhat counterintuitive. Do we currently have such good news indicating that the short-term market may have peaked?
Tom Lee: This is a difficult question to answer; there are some signs based on experience. Our institutional clients are not currently showing very optimistic market positioning, and until both the public and institutional investors adjust to the idea that good news no longer drives the market up, I believe there is still room for the stock market to rise. This is also why the strong performance of stocks in the first week of January is a positive signal, and it seems we may end this month with positive returns, indicating a strong market performance early this year.
Margin debt is one indicator we can pay attention to. We have been tracking the margin debt on the New York Stock Exchange, which is currently at an all-time high, but the year-over-year growth rate is only 39%. Generally, to reach a local market peak, the year-over-year increase in margin debt needs to reach 60%. Therefore, there is still a possibility of further acceleration in leverage, which could mark a local market top.
Macro: Trade War and the Federal Reserve
Wilfred Frost: Let's talk about some macro factors. First, let's discuss trade issues. I remember you mentioned last year that the impact of the trade war was not as bad as expected. However, just this past weekend, there were more tariff-related threats, this time involving Greenland, and targeting the UK and the EU. It seems the UK may compromise, while the EU may retaliate. Does this concern you in the short term?
Tom Lee: There is some concern, but it is not particularly severe. I believe last year, investors often overreacted to escalating tariff negotiations and uncertainty, leading to significant market declines. However, this year, the market's reactions may be more rational, with expected response magnitudes halved. Nevertheless, there is still uncertainty, such as how the Supreme Court will rule on tariff issues. If the ruling is unfavorable to Trump, it could weaken the U.S. negotiating position, and the White House may take more extreme measures, which could trigger greater uncertainty. However, I recently read some news suggesting that the Supreme Court may support Trump's policies. So, the final outcome is still uncertain.
Wilfred Frost: Another important macro issue is the Federal Reserve. When we talked last August, your view was that interest rate cuts by the Federal Reserve were good for the market, but questioning the Fed's independence was bad for the market. However, I feel you did not particularly emphasize the severity of the intervention at that time. How do you view this issue today?
Tom Lee: I think the situation remains similar. The Federal Reserve does face some latent threats, including investigations by the Department of Justice. However, I believe there are still voices within the White House emphasizing not to completely undermine the Fed's independence. History tells us that the Federal Reserve remains one of the most important institutions globally, and undermining its credibility and independence could bring about significant uncertainty.
We also know that the current Federal Reserve Chair, Powell, will end his term this year. So the current situation is somewhat like "letting time pass," as we know a new Fed chair will take office. Once the new chair is in place, I believe the White House may feel satisfied. As for the next Federal Reserve chair, current predictions are constantly changing; it now seems that Hasset's chances are decreasing, while WH and Rick Reer’s chances are increasing. Additionally, there is a general expectation that the magnitude of interest rate cuts this year may be larger than what economic data suggests.
Wilfred Frost: So, once the Federal Reserve chair changes or if there are a few more rate cuts this year, will that ultimately be good for the stock market?
Tom Lee: Yes, I believe it will be good for the stock market. Since 2022, inflation has been a focal point for the market, partly because the Federal Reserve has been battling inflation and hopes to maintain its credibility through tightening policies. However, based on economic data, I believe the actual inflation level is lower than reported. For example, "real inflation" shows as 1.8%, and the median inflation is also 1.8%. The main factor keeping inflation high is housing costs, but home prices are actually declining. Moreover, there is a lag in how housing costs are calculated in the Consumer Price Index (CPI). Therefore, I believe the Federal Reserve has room to cut rates. If housing affordability becomes an issue, we need to address mortgage rates, and rate cuts can help alleviate this problem. Additionally, burdens like consumer installment debt can also be reduced through rate cuts. So I believe the Federal Reserve's rate cuts can actually relieve economic pressure for many Americans.
Sector Allocation: Energy, Materials, and Technology
Wilfred Frost: Let's talk about how investors should allocate sectors. Have the largest stocks like "MAG 7" or "MAG 10" already risen too much? Are they no longer suitable investment choices for 2026?**
Tom Lee: We still have a positive outlook on "MAG 7" because we are confident in their earnings growth. As long as these companies maintain growth, their performance should outperform the market. However, this year, the sectors we are most optimistic about are energy and basic materials. In early December last year, we identified these two sectors as preferred investment areas. This is partly due to the mean reversion investment logic—energy and basic materials have performed very poorly over the past five years, and based on data from the past 75 years, such significant downturns usually signal a turning point. Additionally, some current geopolitical factors are also favorable for these two sectors.
I believe the ISM index may break above 50 again this year, coupled with the Federal Reserve's rate cuts, which means the industrial sector, financial sector, and small-cap stocks may perform well. So while we like "MAG 7," cyclical sectors may be more interesting investment choices this year.
Wilfred Frost: Let's first talk about the energy sector. I remember you mentioned that you are not optimistic about oil prices in the short term but are bullish on energy stocks.**
Tom Lee: That's right. I understand that the movements of oil prices and energy stocks are not always correlated. Part of the reason is that energy stocks reflect expectations of future oil prices. I believe oil prices may be weak or volatile in the short term, but factors such as the development of data centers and the shift to alternative energy will drive oil prices up in the future, so energy stocks can perform well.
Wilfred Frost: Regarding the basic materials sector, especially the metal-related part, their commodity prices have experienced incredible increases. Perhaps we can discuss this in conjunction with cryptocurrencies later.
If metal prices adjust, will these stocks perform poorly? Does your prediction rely on the stability of prices for metals like gold, silver, and copper?
Tom Lee: Yes, if gold, silver, and copper prices experience negative growth this year, the investment logic for the basic materials sector may not hold. However, we believe that while gold has already seen significant increases, silver and copper may perform well this year. Copper, as an industrial metal, is closely related to the ISM index. If copper prices rise, I believe it will drive the performance of basic materials stocks.
Wilfred Frost: The financial sector was a field you were very optimistic about last August, and your predictions turned out to be very accurate. These stocks have performed very strongly, and looking at their charts now, it's almost hard to believe their gains. Do you still have a positive outlook on these stocks? Their price-to-book ratio is no longer cheap.**
Tom Lee: Yes, they are indeed no longer cheap, but I believe the business models of these companies are being redefined in a positive way. Banks are investing heavily in technology and artificial intelligence (AI), so they will become major beneficiaries in the era of superintelligence. The largest expense for banks is employee compensation, and I believe that in the future, banks can reduce their reliance on employees, which will improve their profit margins while lowering earnings volatility. I think banks will be revalued to be more like technology companies. When I started researching banks in the 1990s, their typical valuations were a price-to-book ratio of 1 or a price-to-earnings ratio of 10, and now I believe they should receive a market premium valuation.
Wilfred Frost: I want to discuss technology stocks and AI-related stocks in more detail. You still have a positive outlook on this sector, and your predictions have been very accurate over the past 15 years. However, you mentioned that only 10% of AI stocks will become good investment choices in the next decade, which surprised me, but you still have confidence in this field, right?**
Tom Lee: Yes, I think this is a common phenomenon in any rapidly growing field. For example, looking back at the internet industry, if we look at the stock pool from 2000, which is 25 years ago, only 2% of companies ultimately survived. But those 2% of companies generated returns far exceeding the losses of the other 98%, and overall performance still significantly outperformed the S&P 500 index. So I believe in the AI field, while more than 90% of stocks may ultimately perform poorly, those successful investments will compensate for and even surpass other losses.
The companies going public today are typically in a more mature late-stage, but this seems to be changing. I think this is the first time we are seeing more companies interested in going public, not just through IPOs but also SPACs (Special Purpose Acquisition Companies). Additionally, in the alternative investment space, such as venture capital, private equity, and private credit, investors (limited partners, LPs) have not received much in dividends. Therefore, funds are shifting from alternative investments to the public market, driving more companies to enter the public market. However, in the past 12 months, I have seen many publicly listed companies perform very strongly, so I believe there are still many opportunities in the market.
Wilfred Frost: Regarding mega-cap companies and large-cap stocks, the valuations of these companies are very interesting. In most cases, their valuations are reasonable because they have high growth rates. I heard you mention a point in another podcast that impressed me, which is that these companies may gradually evolve into consumer goods-like companies, thus obtaining premium valuations. This makes me think about whether Warren Buffett noticed this earlier than we did, such as in the case of Apple. Is this your view on these mega-cap companies? For example, even if Nvidia's growth rate slows, could its valuation still remain stable?
Tom Lee: Yes, listeners can look back at the example of Apple. Analysts have insisted since Apple's IPO in the 1980s that it is a hardware company. For many years, they believed that Apple's valuation should not exceed a price-to-earnings ratio of 10 times. However, Apple gradually built a complete ecosystem of service businesses and user retention models, proving that it is not just a hardware company. I remember during meetings with some institutional investors from 2015 to 2017, they still insisted that Apple was a hardware company, while today Apple's valuation has completely changed.
I think people now view Nvidia in a similar way, seeing it as a cyclical hardware company and thus reluctantly assigning it a valuation of 26 times earnings. In reality, Nvidia is a company with high visibility for future profits, yet its valuation is only half that of Costco. I believe these stocks have significant room for further valuation increases.
Wilfred Frost: If the macroeconomic outlook is worse than expected, when the market experiences the correction you predict, such as a 20% drop in the S&P 500, will these stocks decline less like consumer goods companies, or will they still belong to high-volatility growth companies and drop more than the market?
Tom Lee: That's a good question. In a market correction, the first to be affected are usually crowded trades (Note from Deep Tide TechFlow: Crowded trades typically refer to certain assets or stocks that a large number of investors hold in concentration. This situation can lead to these assets exhibiting greater sensitivity during market fluctuations, especially during corrections. When market sentiment turns pessimistic, investors often rush to reduce their positions, exacerbating the price decline of these assets.) because investors need to reduce risk. So "MAG 7," as large positions, may be impacted, but on the other hand, when investors feel nervous, they may turn to "MAG 7." Therefore, I think non-U.S. stocks may experience larger declines during a correction because non-U.S. stocks performed much better than U.S. stocks last year. If trade tensions escalate or the global economic outlook is uncertain, the correction in non-U.S. stocks may be more pronounced.
ETF Products: Granny Shots
Wilfred Frost: Let's talk about some of your recent success stories, such as "Granny Shots," as I mentioned at the beginning, which is your ETF or a series of ETF products. When we discussed this last August, the assets under management for these ETFs were between $2 billion and $2.5 billion, and now they have grown to $4.5 billion.
Tom Lee: Yes, the total size has reached $4.7 billion, distributed across three ETF products. Granny GRNY is the largest. Granny J, launched in November last year, is a small and mid-cap stock ETF, currently with assets of about $355 million. The Granny ETF, aimed at income-oriented investors, which is the income-generating version, distributed dividends for the first time last December. This typically drives asset growth because there is a clear yield. The target yield is about 10%, and the current asset size of this product is approximately $55 million.
Wilfred Frost: For the coming year, is now a good time to invest in small-cap stocks or income-oriented products rather than traditional products?
Tom Lee: I am not the type to try to "time" the market. For example, last January, Mark Newton warned of a potential correction, and the market's decline far exceeded expectations, reaching 20%. But we still advised investors to remain fully invested, and ultimately they recouped their losses by July.
I believe small-cap and mid-cap stocks have been underperforming for a long time, and even if a correction occurs, it does not change the fact that they may be entering a strong performance cycle lasting five to six years. So I would still choose to hold these stocks.
Of course, if the overall market declines, the Granny ETF will not rise. Therefore, I think any investors buying these ETFs need to recognize this. However, these ETFs have chosen the strongest companies related to the most important themes, so they should perform better during market corrections and may perform even stronger during market recoveries.
Gold and Cryptocurrency
Wilfred Frost: Let's first talk about gold and then discuss cryptocurrency. What do you think are the reasons for gold's outstanding performance last year?
Tom Lee: I think there are some obvious reasons for gold's strong performance, as well as some less obvious ones. The obvious reasons include: First, there is more political and geopolitical uncertainty in the current investment environment. Global wars, and although the U.S. president has performed well economically, he has exacerbated global trade uncertainty and division. Second, central banks around the world are generally adopting loose policies, and the U.S. has finally begun a loosening cycle, including ending quantitative tightening (QT), all of which support gold.
As for the less obvious reasons, first, Tether (the largest stablecoin provider in the U.S.) has become the largest private buyer of gold. As far as I know, each unit of Tether's stablecoin is fully backed by government bonds, but they generate income from these assets and use the extra returns to buy gold. I believe since last July, Tether has become one of the largest net buyers.
Wilfred Frost: When you say "believe," is this based on solid data? How does Tether's purchasing volume compare to the recent large purchases by various central banks?
Tom Lee: Yes, we have indeed seen relevant data. I cannot specify the scale exactly, but I believe only one central bank's purchasing volume exceeds that of Tether. If you simply observe the issuance of Tether's USDT and the price of gold since last July, they are highly correlated.
Another factor is that we conducted a study in 2018 and found that investment preferences often cross generations. For example, the Baby Boomer generation likes gold, Generation X prefers hedge funds, while the millennial generation entering the working age is now showing renewed interest in gold, which their grandparents liked. This has also contributed to the resurgence in gold demand.
Wilfred Frost: I am a millennial, and I also like gold, but I sold it too early. Regarding gold, do you think it is the ultimate currency, or is it merely a commodity like copper, silver, and other industrial metals? This would change our view of last year's returns, as both JPMorgan and Nvidia performed well, with stock increases around 20%. But if we view gold as the ultimate currency, then they may actually be declining. What do you think?
Tom Lee: Yes, we at Fundstrat have not explicitly recommended gold, but I think we probably should. You described it very accurately, it makes no sense to view gold as a commodity metal because last year, the total sales of gold in industrial and retail jewelry were about $120 billion, while its net worth reached $30 trillion. So from a price-to-sales ratio perspective, it is unreasonable. Moreover, we know that gold is not scarce, as there are vast resources of gold underground, and all gold is extraterrestrial material; for example, SpaceX may discover a gold-containing asteroid in the future, which would lead to a sudden and significant increase in gold supply.
However, gold has served as a store of value for centuries. As you said, it acts as a substitute for the dollar. Therefore, we should perhaps view gold as a substitute for the dollar, and from this perspective, all other assets are depreciating relative to gold.
Wilfred Frost: If viewed from this perspective, do you think more people will accept this view? What would the implications be?
Tom Lee: Yes, I think this means that gold should have a place in investment portfolios. I see that Ray Dalio recommends a gold allocation of up to 10%, and in this podcast, you mentioned it could be 15%. Assuming it is 15%, but the proportion of gold in most people's portfolios is almost zero. So today, gold is still an underallocated asset.
Wilfred Frost: Why did cryptocurrency not perform as well as gold last year?
Tom Lee: I think the reason is related to timing. The performance of cryptocurrency was comparable to gold before October 10 last year. For example, Bitcoin rose 36% at that time, Ethereum rose 45%, even outperforming silver. But on October 10, the largest deleveraging event in history occurred in the cryptocurrency market, even more significant than the impact of the FTX incident in November 2022. After that, Bitcoin's value dropped by over 35%, and Ethereum fell by nearly 50%.
The cryptocurrency market experienced deleveraging, which disrupted the liquidity providers in the market, and liquidity providers in the cryptocurrency market are essentially equivalent to central banks. Therefore, about half of the market liquidity providers were eliminated in the October 10 event. Until cryptocurrency gains widespread support from mainstream institutional investors, such internal deleveraging events will continue to have a significant impact on the market.
Wilfred Frost: Does this mean you acknowledge that Bitcoin is not digital gold?
Tom Lee: Bitcoin is digital gold, but the crowd that believes in this theory does not overlap with the crowd that owns gold. Therefore, the adoption curve for cryptocurrency is still higher than that for gold, as there are more people who own gold than those who own cryptocurrency. The path for future cryptocurrency adoption may be very bumpy, and I think 2026 will be a very important test. If Bitcoin can reach a new all-time high, then we can be sure that the deleveraging event is over.
Wilfred Frost: This year, your price target for Bitcoin is $250,000, right? What is the driving force behind this prediction?
Tom Lee: Yes, we believe Bitcoin will reach a new high this year. I think the driving force is that the utility of cryptocurrency is increasing. For example, banks are beginning to recognize the value of blockchain technology, and settlement and final clearing run very efficiently on the blockchain. Additionally, cryptocurrencies like Tether have proven that native banks based on blockchain are actually better than traditional banks. For example, Tether is expected to earn nearly $20 billion in 2026, making it one of the top five banks in the world by profit. In terms of valuation, it may be second only to JPMorgan, and even twice that of Goldman Sachs or Morgan Stanley.
Tether has only 300 full-time employees, while JPMorgan has 300,000 employees. By using blockchain, Tether's profits are almost on par with any bank, even exceeding most banks. At the same time, its money supply (M1) accounts for less than 1%, and its balance sheet is very small, yet it remains one of the most profitable banks in the world.
Wilfred Frost: Let's talk about Ethereum again. You mentioned last August that you were optimistic about both Bitcoin and Ethereum, and you believe Ethereum will perform better in the long run. Why did Ethereum drop so significantly in the last quarter of last year?
Tom Lee: Ethereum is the second-largest blockchain network, and I believe it will always be more volatile than Bitcoin until its scale approaches that of Bitcoin. The cryptocurrency market typically views the price of Ethereum as a ratio to the price of Bitcoin. If we simply take the ETH to BTC ratio as a price benchmark in the cryptocurrency world, the price ratio of Ethereum relative to Bitcoin is still below the levels of 2021. Compared to four years ago, Ethereum has become a superior blockchain.
For example, tokenization, including dollar tokenization, is a major trend that Wall Street is betting on. Larry Fink called it the biggest innovation since double-entry bookkeeping. Vlad Tenev from Robinhood wants to tokenize everything. We have seen not only the dollar (stablecoins) but also credit funds working to tokenize. JPMorgan is launching a money market fund on Ethereum, and BlackRock has already tokenized credit funds on Ethereum. Therefore, Ethereum is actually the blockchain that Wall Street is starting to adopt. If the price ratio of Ethereum returns to the highs of 2021 while Bitcoin reaches $250,000, then the price of Ethereum could reach about $12,000. Currently, Ethereum is priced at around $3,000.
Bitmine Immersion and Mr. Beast Investment
Wilfred Frost: Last week, you announced a $200 million investment in Beast Industries (the company behind Mr. Beast). Mr. Beast is currently one of the largest YouTube influencers in the world. From what I understand, his influence in the media space is quite remarkable, right?
Tom Lee: Yes, I think most people on Wall Street do not realize the extent of Mr. Beast's influence for several reasons. First, it is a private company, so his influence needs to be assessed through media data. Second, he is very iconic among Generation Z, Generation Alpha, and Millennials.
He currently has over 1 billion followers. The only person with more followers than him on platforms like TikTok, Instagram, and Meta is Cristiano Ronaldo. His YouTube videos have more monthly watch time than the total of Disney and Netflix combined. Each episode of Mr. Beast's YouTube videos has over 250 million viewers each month, and he releases two episodes a month, which is equivalent to the viewership of two Super Bowls each month. Additionally, the Beast Games he launched on Amazon Prime is the top-ranked program on that platform, with viewership surpassing almost all movies.
Wilfred Frost: These numbers are indeed shocking, but why haven't companies like Disney, Amazon Prime, Comcast, or Netflix invested in Beast Industries, while a financial company focused on Ethereum has?
Tom Lee: Well, they are very selective about who can enter their capital structure. Mr. Beast himself (Jimmy Donaldson) is the largest shareholder, with other shareholders including Chamath Palihapitiya from Social Capital, and Bitmine is their largest corporate investor on the balance sheet. As you can imagine, many companies want to invest in Beast Industries, and we are fortunate to be invited to participate in their capital structure.
Wilfred Frost: At last week's Bitmine annual shareholder meeting, you mentioned that Beast Industries would launch financial products or services. Is this plan already confirmed? Will you be involved?
Tom Lee: Yes, CEO Jeff Henbold has mentioned future plans for Beast Financial Services. I believe Beast Industries may disclose more details in the coming weeks. They are indeed very smart and have productized Mr. Beast's brand in various ways, such as launching Feastables chocolate, healthy lunches, beverages, and collaborations with other creators. Therefore, further productization is a natural step for a company with 1 billion followers.
Wilfred Frost: Do you think this is a positive development for Ethereum? Is it possible that Mr. Beast, with his 1 billion followers, could promote Ethereum in the future?
Tom Lee: I think it is very likely. Today, there is a huge gap in financial literacy globally, especially among young people, as schools do not really teach this knowledge. Financial literacy is very important because we know many Baby Boomers and Generation X are under-saving for retirement, and Social Security cannot be fully relied upon. Therefore, financial education is one of the biggest gaps in society today.
Mr. Beast is likely to become a leading figure in promoting financial education, which will bring tremendous benefits to society. This is also one of the reasons we are interested in Beast Industries, as our corporate values and social values align very closely with theirs. Mr. Beast represents kindness and integrity.
As for the future of finance, banks have clearly stated that blockchain is the direction of financial development. For example, JPMorgan wants to build its business on blockchain, and Jamie Dimon has also stated that blockchain is a better way to build banks. Today, the places where banks choose to build smart contracts are precisely on Ethereum. Therefore, if financial education is to be provided to the public, Ethereum should have a place in it.
Wilfred Frost: One last question, I still feel that such an investment seems a bit off for a financial management company. You previously mentioned a "moonshot investment" like Orbs; does this mean you acknowledge it as a high-risk investment? Or do you see it as a strategic investment?
Tom Lee: I understand that for those who do not understand our investment logic, this may seem completely high-risk. But it actually makes sense. Bitmine has made it clear since its inception that it would allocate about 5% of its balance sheet to "moonshot investments." Based on today's asset size, this amounts to about $700 million in investment capacity, and we have already invested about $220 million in these plans.
I believe Beast Industries is a very promising investment because it connects us with the largest content creator in the world, possibly the "Mr. Beast" of our generation. He is unprecedented, and it may be a long time before anyone else can surpass him. As a financial management company, our goal is not only to strengthen the Ethereum ecosystem but also to ensure its future sustainability. By establishing potential organic collaborations with Mr. Beast, I believe this will further solidify the future of Ethereum. Therefore, I see this as a very good strategic move.
Final Recommendations
Wilfred Frost: Two final questions. The first is, what is your most important advice for stock market investors this year?
Tom Lee: Yes, I think the most important advice I can give to investors is not to try to time the market, as doing so will become an enemy of your future performance. Many investors always hope to buy at the market's lowest point and sell at the highest point. But historically, whether in the stock market or the cryptocurrency market, the people who truly make money are those who invest for the long term. Although I have warned that there may be a lot of volatility in 2026, investors should view market corrections as a buying opportunity rather than an exit opportunity. Too many people sell out of emotion and then miss the chance to buy back, losing the compounding benefits of investing. I think this is a very important distinction.
Wilfred Frost: The second question is, what is your long-term advice for cryptocurrency investors? I believe this may relate to the points mentioned earlier, but how do you think they should invest?
Tom Lee: Yes, I believe many listeners are still skeptical about cryptocurrency or have not engaged with it at all because they may feel they cannot truly understand it. We need to recognize that cryptocurrency is being embraced by the younger generation—it has become a part of their lives because they are digital natives. In the future, the boundaries between services and currency will become blurred. This is not unlike when Bill Gates talked about the internet on The Late Show with David Letterman in 1995. At that time, David Letterman expressed great skepticism about the concept of the internet because he belonged to a generation that could not easily accept it. If Bill Gates had explained the future of the internet to a 20-year-old, that young person would have understood immediately, and today cryptocurrency is experiencing a similar situation.
Wilfred Frost: So how do you think people should invest in cryptocurrency? You recommend Bitmine, but should they hold a basket of cryptocurrencies? Or should they invest in financial companies? Or allocate Bitcoin and Ethereum in a 2:1 ratio?
Tom Lee: I think a dual approach can be taken. First, there is a theory called the "Lindy Effect," and I recommend only buying cryptocurrencies that have been around for a long time, such as Bitcoin and Ethereum. Second, I believe cryptocurrency may become a "settlement layer" in the future, even though it may be invisible. Bitmine not only serves as the settlement layer for the industry, but through our investments, we are actually becoming a financial services company. Therefore, investing in Bitmine is not just investing in Ethereum; you are also investing in a company that is driving the future of finance.
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