Fundstrat head of research Tom Lee says he’s not concerned about Ethereum’s (ETH) price action despite plunging over 60% from its all-time high of around $4,900.
In a new CNBC interview, Lee says historical price action shows that Ethereum has never failed to recover after major market meltdowns.
He says Ethereum has proven bears and disbelievers wrong time and time again.
“And just in the last eight years, Ethereum’s had seven drawdowns of 60% or more. The good news is that seven of those were all V-shaped recoveries. So we had a waterfall decline. We have cryptos bottoming now, which it kind of looks like it is, especially given MicroStrategy’s 25% move. The recoveries are V-shaped. So we recover as quickly as we’ve fallen.”
A cursory look at Ethereum’s weekly chart on the crypto exchange platform Binance shows that it has a history of V-shaped recoveries after market collapses. However, past performance does not guarantee future results.
Lee reminds traders and investors that Ethereum is very well positioned to capture the potential upside coming from Wall Street’s push toward tokenization.
“As you know, coming out of Davos, what was the big story around what Wall Street plans to do? It’s tokenization, which is moving a lot of their financial infrastructure onto the blockchain. That’s not going to change just because crypto prices have fallen. But what is the blockchain that is evident, listed, named by whether it’s UBS, Standard Charter, or Fidelity, where they’re tokenizing products, it’s on Ethereum.
So, Ethereum is not in a death spiral because the utility is going up. The price, of course, has been awful. Unfortunately, crypto prices are volatile. It’s not like earnings estimates change for Ethereum. In fact, network usage is up 80% in just the last six months.
But it does mean prices move a lot. I mean, it’s sort of a feature of crypto itself.”
At time of publishing, Ethereum is trading at $2,065.
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