Fundstrat investor Tom Lee on stablecoins, ETH, and Tesla: The group relying on fundamentals as an investment basis is shrinking
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Fundstrat investor Tom Lee on stablecoins, ETH, and Tesla: The group relying on fundamentals as an investment basis is shrinking
"The real reason I chose Ethereum is that stablecoins are exploding."
Navigating Web3 tides with focused insightsAuthor: MD, Bright Company
Last week, Thomas Lee (Tom Lee), managing partner and head of research at Fundstrat Global Advisors, shared his thoughts on the differences between a "new generation" of retail and institutional investors during an appearance on Amit Kukreja's podcast.
Lee previously served as chief strategist at JPMorgan for many years and is well-known among U.S. investors for his frequent media appearances on platforms like CNBC and multiple accurate market calls—though he has also drawn criticism for his consistently bullish stance. On the podcast, he discussed how the era for retail investors is changing—partly due to the rise of independent media, or what he calls “the emergence of Twitter,” which has allowed new firms with their own media channels to gain broader attention and influence. Another factor, he noted, is demographic shifts: he observed that “every 20 years, American retail investors regain interest in stocks.”
Lee is also a strong supporter of digital assets such as Bitcoin and Ethereum. Recently, Tom Lee was appointed chairman of Bitmine’s board and participated in the launch of the company’s $250 million ETH treasury strategy, a move that has attracted significant market attention.
"I like Ethereum because it's a programmable smart contract blockchain, but frankly, the real reason I'm choosing Ethereum is that stablecoins are exploding. Circle is one of the best IPOs in five years, trading at 100x EBITDA, delivering exceptional returns for certain funds. In traditional Wall Street terms, Circle is a god-tier stock—and it’s a stablecoin company. Stablecoins are the ChatGPT of crypto—now mainstream—and evidence that Wall Street is trying to 'equitize' tokens. Meanwhile, the crypto world is 'tokenizing' equities, such as tokenizing the dollar." In the interview, Tom Lee explained this logic.
Below is Bright Company’s translated and edited version of the interview:
Betting on the "Robinhood Generation": Retail Investors Re-Engage With Stocks Every 20 Years
Amit: …In 2022 and 2023, you were one of the few who dared to go against mainstream media narratives. You said, ‘I don’t think the market will fall further—it’s already bottomed out. This is the beginning of a new bull market.’ Because your voice differed from nearly everyone else, people like me—and millions around the world—listened to your advice and seriously studied your research, which wasn’t conspiracy theory but backed by facts and data. And it changed their lives…
Tom Lee: Thank you so much for those kind words—I truly appreciate it. That was exactly our goal when we founded Fundstrat. We started the firm in 2014—this year marks our 11th anniversary. Before that, I worked at major banks, serving as chief strategist at JPMorgan for nearly 16 years. I wanted to create a firm that delivered institutional-grade research in a way that anyone could understand. At the time, we believed that in 2014, the public wasn’t particularly interested in stocks—the market was dominated by institutions, and retail trading volume was declining. But I remembered how passionate people were about stocks in the 1990s. I believed that enthusiasm would return. So our bet was that people would care about what we had to say.
Amit: Impressive. You foresaw the arrival of the "Robinhood generation." Did you have any data supporting that view back then?
Tom Lee: Our evidence-based research focuses heavily on demographics. We’ve published numerous white papers analyzing generational behavioral shifts. One paper pointed out that millennials are the largest generation in history, totaling 98 million—40% larger than the previous generation. And if you divide generations every 20 years, each generation tends to rediscover stocks after the prior one has been traumatized by the market.
For example, after the dot-com bubble burst, many of my peers stayed away from stocks entirely. But those who started making money after 2000 came to see stocks positively again. So we bet that this cycle would repeat. In fact, while at JPMorgan, I advised senior executives to enter the retail brokerage business—but they thought it was “dead.” Looking back, that would have been a tactically brilliant investment. So that became our path. Our firm is small, without a massive platform, so we learned early how to build relationships and amplify our voice. We embraced Twitter and other media early—that was our “guerrilla warfare” strategy for growth.
Amit: Embracing new media back then was still risky, since social media wasn’t as developed as today. Did using social media feel natural, or was it a struggle?
Tom Lee: The first few years were tough—we struggled to find our voice. Back then, Twitter only allowed 255 characters and wasn’t nearly as powerful. Threads weren’t common, and images were rarely used. Eventually, we realized the best approach was simply to tweet like we’re having a conversation. So we started posting short, conversational tweets.
Amit: I think this natural expression is exactly why your audience loves you. Whether you're on CNBC or an independent podcast like mine, your words carry weight. Does it ever feel strange that whenever you speak, thousands immediately react?
Tom Lee: Yes, it’s a huge responsibility. I’ve been a stock research analyst for 34 years—I’ve often issued buy ratings on stocks, so I know what it feels like to put your name and price target on the line. If the stock drops, people get angry. In the public sphere, people only remember your most recent call. On Twitter, some people never let you forget your mistakes. Most of our interactions on Twitter are actually people insulting us, calling us terrible. I find it amusing. I don’t mind, because I understand that’s just the nature of the platform.
Amit: You sometimes retweet critical posts even when you haven’t made a mistake—it’s effective, a great way to communicate your views to the world.
On Fed Rate Cuts: Where Is the Truth in U.S. Employment Data?
Amit: Let’s shift to market-related topics. A simple one—do you think Powell should cut rates now?
Tom Lee: Honestly, I almost never comment directly on this—even in client reports, I rarely express personal opinions. We serve roughly 10,000 registered investment advisor clients and 300 hedge fund clients. I typically just present them with the evidence and ask for their take. For example, which indicators should the Fed focus on, and what policy makes sense? We know that if you use the European Central Bank’s methodology—excluding housing—U.S. core inflation is already at 2%. Simply excluding housing, U.S. core CPI drops to 1.9%. The ECB’s rate is 2.5%, while the Fed’s is 4.5%. So why is the Fed tightening 200 basis points more than the ECB? The difference lies entirely in housing. Is the Fed deliberately suppressing the housing market? Actually, no.
Amit: But that does raise suspicion.
Tom Lee: Yes, it does. Another point: the Fed says tariffs will bring inflation this summer, so they need to wait before cutting. We recently analyzed this for clients and shared it on Twitter. Tariffs are essentially taxes—the money goes to the government. For example, if the U.S. government adds a $6 tax on gasoline, the CPI gasoline price will spike. But the Fed won’t hike rates because they recognize consumers’ wallets are being squeezed. So we might cut rates because money taken via taxes eventually flows back into the economy. This isn’t inflation—it’s just a transfer of funds. That’s what tariffs fundamentally are: someone pays, the government collects, and the money re-enters the economy. It’s not inflation—it’s actually…
Amit: It’s taxation. Powell and the Fed argue companies will raise gas prices anyway, even if partially offset, so technically it still counts as…
Tom Lee: Look, this is like saying price increases at different points in the supply chain count as inflation. But regardless of where it happens, it’s still a tax. Mathematically, a tax is a tax, no matter the location. So what is inflation? Is it pretend taxation?
Amit: Or perhaps—if something appears suddenly, real but not fictional, yet gets offset later—then ultimately it’s not inflation. That’s what Trump often says: if we cut taxes, people will have more money to afford higher fuel prices.
Tom Lee: Right. If I set aside partisanship and analyze it as I did in undergrad at Wharton, I’d say this isn’t inflation because there’s no inflation signal. If it’s one-time, it’s not inflation. If it’s fundamentally taxation, then it’s not inflation. Anyone calling it inflation is trapped by the CPI definition and missing the bigger picture. CPI itself isn’t even a good inflation measure—indices like Trueflation are better.
Amit: Do you think current methods of measuring inflation—like those used by the U.S. Bureau of Labor Statistics—or data like JOLTS, which reported 400,000 new job openings, are outdated?
Tom Lee: Yes—or rather, these metrics fail to reflect reality. Response rates matter, and CPI includes many odd constructs. For instance, technological innovation is deflationary, but it’s never treated that way in official stats. JOLTS data rarely aligns with other sources like LinkedIn. JOLTS has only a 40% response rate, and its figures often don’t match up.
Amit: This is confusing, Tom. Our audience is retail. Yesterday, the government said companies have 400,000 open jobs. Today, ADP employment dropped by 33,000 versus an expected gain of 99,000. My viewers are lost. What’s going on?
Tom Lee: If you look closely, JOLTS job openings rose sharply because restaurants couldn’t hire staff, so they increased job postings. This is tied to deportation risks—many workers aren’t showing up. Today’s job losses occurred in financial services, professional services, and education. Education is seasonal. Professional and financial services saw consulting firms lay off staff. This isn’t about tariffs—it’s structural.
Amit: Do you think AI is affecting service-sector employment today?
Tom Lee: Possibly. Reduced hiring likely reflects AI impact. Salesforce, for example, said half their work is now done by AI.
Amit: Meta says 30% of their code is AI-written. Microsoft too. Imagine—software engineers, among the highest earners, becoming less essential. It’s scary, and clearly affects inflation. On April 2, “Liberation Day,” many were confused. That day, reciprocal tariffs were announced, and the market plunged to 40,800—the 2022 low. You were quoted saying you didn’t believe Trump would break capitalism’s core covenant, and predicted a V-shaped rebound. My question: why didn’t your institutional clients realize that the guy from “The Apprentice” wouldn’t impose 90% tariffs on Zimbabwe?
Tom Lee: Haha, yes, some data was absurd back then. Institutional investors have “guardrails”—for example, if VIX rises, they must reduce exposure; if markets fall, they sell. So during volatility, institutions can’t hold firm—they’re forced to sell passively. We predicted a V-shaped rebound after the “waterfall decline” because historically, over the past century, markets always bounce back V-shaped absent a recession. Our analysis showed this was merely a “growth scare”—high-yield bonds didn’t react, only equities moved. Another reason institutions were bearish: they believed only Fed rate cuts could save the market. We argued that was an illusion. Even without Fed cuts, the market would rebound V-shaped. Many insisted it would keep falling without cuts—but instead, it rebounded V-shaped.
Amit: Why did you see the reliance on Fed rescue as an illusion?
Tom Lee: Because when the Fed injects liquidity, the money often just stays in banks. If banks don’t lend, the cash circulates only within the banking system. More important capital comes from retail investors. Today’s market has four key participants: institutions, high-net-worth individuals, and family offices—which typically follow hedge funds. Then corporate buybacks. And finally, retail investors. Only retail is actively buying the market.
Retail vs. Institutions: The Best Companies Have Customers as Shareholders
Amit: Why do you think retail investors see things more clearly? I know institutions have fiduciary duties forcing them to sell—but why don’t they buy aggressively like retail?
Tom Lee: I think retail treats it as a stock market. For example, I like Palantir, I own Meta—should Meta really crash because of tariffs? Is Palantir fairly valued at $80? Retail looks at individual stocks, but institutions become increasingly macro-focused. They believe Trump will drag us off a cliff, or the Fed will ruin everything. These biases lead them to think the market is irrational when reality contradicts their framework. This rebound was driven solely by retail buying. Institutions were forced to stay in cash and missed the V-shaped recovery—this was the “most hated V-shaped rebound.”
Amit: Holding cash earns 4%, but Meta surged 40%... What’s the dialogue like between you and institutions? I recall in 2023 you kept saying institutional clients didn’t believe in the market—that became your “wall of worry” thesis, suggesting more upside. When you talk to them, do they want to yell at you? But also thank you later for signaling it was time to buy?
Tom Lee: Yes, institutions are more pessimistic now than in 2020 or 2023. They firmly believe the economic cycle is turning. One thing: if you examine political leanings in markets, 65% of fund managers voted for Biden—I didn’t know that before. Bond markets are the opposite—historically more Republican-leaning. So most think Trump is crazy because they didn’t vote for him.
Amit: Is that part of the reason they don’t buy?
Tom Lee: We often write in our research that markets have partisan bias. These conversations have been awkward this year. They say, “Tom, we have to sell. You tell us not to, but even though I don’t know the bottom, I know it’ll be a V-shaped rebound.” Every time VIX exceeds 60 and then falls below 30, it’s been a bottom—100% of the time. Yet they insist, “This time is different, because the Fed won’t save us.” Everyone finds reasons to predict a recession. Economists scream recession—so how can a stock investor claim a V-shaped rebound? They’re trapped. Our conversations aren’t pleasant.
...
Amit: Do you think overall retail participation is positive?
Tom Lee: The equity market is undergoing a massive transformation—one I largely credit to X (formerly Twitter), because the best companies are turning shareholders into customers. Take MicroStrategy (MSTR.US). They “orange-pilled” people—investors buy MicroStrategy not because of its legacy security business, but because Saylor (former CEO) helps them accumulate more Bitcoin per share. Or Palantir—CEO Alex Karp embodies cult-like leadership. Tesla too—buying Tesla is essentially betting on Elon. These stocks enjoy lower effective capital costs because they’ve turned shareholders into customers. I think this is very healthy—it’s Peter Lynch’s philosophy: “Buy what you know.” Talk to a Tesla owner—they’ll discuss Optimus, FSD (Full Self-Driving) in detail. They know exactly what they’re investing in. Today’s retail investors are highly informed. Calling them “dumb money” is completely wrong—they know what they’re doing.
Amit: Many institutions say Tesla’s 200x P/E is insane. Those who can explain FSD perfectly may not understand valuation. But your point is, these people drive Teslas themselves, experience FSD firsthand, and use imagination to anticipate future value—so valuation may matter less. Is it that value investors think 200x P/E is absurd, while “believers” say, “I drive this car every day—you have no idea what you’re talking about”?
Tom Lee: Excellent question. The real issue is, how many people actually need “fundamentals” to invest? That group is shrinking. For example, do you own a luxury watch? (Amit: No.) Do you collect art? (Amit: No.) Well, Tesla’s scarcity is like art. Can you name another company like Tesla? There’s only one Tesla. It’s like a Da Vinci painting—only one exists. If you value a painting just by materials, you might say it’s worth 12 cents. But if 100 people say it’s the only one and offer $100 million, that’s its value. That’s Tesla. Some say Tesla is just a car company, but others say Tesla is Da Vinci. There’s no second Tesla. That scarcity deserves a premium.
Amit: I’ve never thought of it that way—the analogy makes sense. Elon’s brand now surpasses many corporate brands. I don’t even know who leads Procter & Gamble.
Tom Lee: Exactly. Can you name the CEO of the largest non-tech company? Most of us can’t. That proves Tesla is irreplaceable. They excel at manufacturing—one of the hardest things in the world—and remain profitable. Elon said he’d do space—SpaceX now holds 90% of the market. He said AI—Grok is now valued at $130 billion. He builds companies. And there’s only one Tesla. Some call it a mass-market company, but I don’t see it that way.
Amit: It’s hard to explain with valuation alone. Is this why you believe Tesla will lead the V-shaped rebound?
Tom Lee: Yes. We created a “washout stock” list: we took April 7 as the low point, screened 3,000 liquid stocks tradable by institutions—how many didn’t hit new lows on April 7 and had lower volume? About 37 passed—including Tesla, Palantir, and Nvidia. These stocks were already fully sold out—people had finished selling by April, so no new lows. That’s our logic.
Amit: All unique brands—Nvidia, Palantir, Tesla.
Betting on Ethereum Because of Stablecoins
Amit: Let’s discuss your latest move—on Monday, you became chairman, and your firm raised $250 million to buy Ethereum, effectively creating an Ethereum treasury. First question: why Ethereum?
Tom Lee: Well, Ethereum… I assume the audience generally knows Ethereum. I like Ethereum because it’s a programmable smart contract blockchain. But frankly, my real reason for choosing Ethereum is that stablecoins are exploding. Circle is one of the best IPOs in five years, trading at 100x EBITDA, delivering exceptional performance for certain funds. On traditional Wall Street, Circle is a god-tier stock—and it’s a stablecoin company. Stablecoins are crypto’s ChatGPT—now mainstream—and evidence that Wall Street is attempting to 'equitize' tokens. Meanwhile, crypto is 'tokenizing' equities—like tokenizing the dollar.
Now JPMorgan, Amazon, Walmart, Goldman Sachs—all want their own stablecoins. It’s a strong business model, consumer-friendly and merchant-friendly. But all of this runs on blockchains—and most stablecoin transactions occur on Ethereum. ETH once neared $5,000, dropped to $1,400–$1,500, and is now back at $2,400. Total stablecoin supply is $250 billion—already generating 30% of Ethereum’s gas fees—yet Ethereum mints over 50% of all stablecoins. Treasury Secretary Scott believes this is a $2 trillion market—a 10x expansion. The U.S. government wants more stablecoins because together they’re the 12th-largest holder of U.S. Treasuries and promote dollarization. 80% of stablecoins are used overseas. If stablecoins grow 10x, Ethereum’s gas fee revenue will explode. So Ethereum sits right in the middle—benefiting from both Wall Street’s “equitization” of crypto and crypto’s “tokenization” of equities. I believe Ethereum will be rediscovered this year—Robinhood just announced using Ethereum Layer 2 for stock tokenization.
Amit: Robinhood is tokenizing Wall Street, governments support stablecoins because they boost Treasury demand, and ETH is the underlying infrastructure. ETH clearly underperforms BTC in price—why hasn’t everyone noticed?
Tom Lee: Because crypto is a trust- and narrative-driven space. Bitcoin’s story is trust, digital gold. The new story is programmable money. People are realizing they need not just programmable money, but the largest network to run it—and Ethereum, with a $300 billion market cap, is the largest smart contract blockchain. So Ethereum has the potential to completely reshape the landscape.
Amit: In 2021, Ethereum’s main use was NFTs—many smart contract projects may have died—yet this direction is now more sustainable and government-backed. BMNR (Bitmine Immersion Technologies Inc) rose from $4 to $40 (note: as of publication, BMNR.US trades at $111.50)—people believe in your vision. Do you think investing in such a treasury vehicle offers better risk-reward than buying ETH directly?
Tom Lee: I won’t comment on BMNR specifically, but I can explain why treasury companies (firms whose primary business is acquiring and holding assets) like BMNR make sense. Some ask, if I want to bet on Ethereum, why not just buy an ETF? Why not buy ETH on-chain and self-custody?
But treasury companies have five valuable options.
If you buy an ETF or ETH on-chain, your holdings are fixed, and ETFs charge management fees. But a treasury company aims to grow the number of tokens per share—MicroStrategy measures itself this way.
First, if the stock price trades above net asset value (NAV), the company can issue new shares to acquire more assets, increasing NAV per share—this is “reflexive growth,” rare in markets.
Second, because the underlying token is volatile—Ethereum is twice as volatile as Bitcoin. If you want leveraged ETH exposure via an ETF, banks charge ~10% interest. But a treasury company, as a corporation, has lower financing costs and can “sell volatility” via convertibles or derivatives—MicroStrategy’s financing cost is zero.
Third, the gap between market price and NAV creates stock-like features and enables external arbitrage with other treasury firms. If one company trades at 3x NAV, you can acquire other treasury companies—creating arbitrage opportunities. Fourth, you can operate a business—e.g., providing services to the DeFi ecosystem.
Amit: Like lending.
Tom Lee: Yes—impossible on Bitcoin, but useful on Ethereum.
Fifth, you can create structural “put options.” Example: MicroStrategy holds 600,000 BTC. If the U.S. government wants to buy 1 million BTC, buying directly would spike prices. Instead, they could buy MicroStrategy at a premium—this is a “sovereign put option.” Same for Ethereum: if a treasury firm holds 5% of ETH and is critical to the ecosystem, its valuation should be higher. If Goldman wants to launch a stablecoin on Ethereum, they’ll need to secure the network—possibly by buying large amounts of ETH or acquiring such treasury firms. So treasury companies hold Wall Street “put options.”
Amit: That logic is clear. If you believe in Ethereum’s macro thesis, these structures give you multiple levers.
Fundstrat Granny Shots ETF Holdings (Source: Granny Shots website)
...
Amit: Finally, our audience is especially interested in two Fundstrat Granny Shots ETF holdings—Palantir and Robinhood. Let’s start with Palantir?
Tom Lee: Palantir is redefining the relationship between companies and enterprises—helping businesses improve. Typically, such firms are either consultants or tech companies. Palantir is both—but with fewer people. It’s like giving Fortune 500 companies a “wizard”—and governments use it too.
Amit: 1,000 employees, fewer than 800 clients, $4 billion in revenue. Second-largest holding: Robinhood.
Tom Lee: Robinhood is impressive. I see it as the Morgan Stanley for the younger generation. Don’t forget—on Wall Street in the 1980s, new brokers emerged to serve baby boomers. Charles Schwab started as a newsletter before becoming a broker. E*Trade and Schwab were the brokers for the baby boom—Robinhood is today’s version. I think Robinhood is smart—great product experience, understands UI importance, and moves quickly.
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