Cryptocurrency enthusiasts recently met at Cipriani 42nd Street in Manhattan to herald the dawn of a new financial age, extending beyond bitcoin. Ethereum, the world’s second-largest cryptocurrency, had surged by approximately 75% since June, nearing an all-time high.
Digital asset executives met inside the former Bowery Savings Bank building for what appeared to be a celebratory event combined with a marketing presentation.
The effort aims to persuade the financial sector that ethereum is more than just a speculative digital currency, but rather the foundation of a forthcoming monetary system. Storing it in corporate vaults could accelerate the realization of this vision.
Tom Lee, president of BitMine Immersion Technologies, is on stage. His company, previously obscure on Wall Street, now holds over $6 billion in ethereum. Lee’s bold strategy involves not just investing in ethereum, but also establishing a business centered around it. His ambitious plan, detailed in various online videos aimed at retail investors, is extensive.
He mentioned that Ethereum is the point of convergence for Wall Street and artificial intelligence.
The network’s main activity is still centered around trading tokens among cryptocurrency users, which makes the statement bold.
Lee believes that ethereum serves a different purpose compared to bitcoin, functioning not just as currency but as a customizable tool with “smart contracts” that can carry out various tasks automatically, eliminating the need for a bank.
People utilize it for trading cryptocurrencies, transferring stablecoins, or obtaining loans secured by cryptocurrencies, and in each transaction, they incur an ethereum fee. The token’s demand increases as more businesses and initiatives rely on its services.
If corporate treasuries holding ethereum are correct in their silence, they stand to benefit not just from the soaring value, but also from their early anticipation of the future financial system’s structure.
Rivals of Ethereum
Ethereum remains the most active blockchain in terms of on-chain value but encounters challenges from faster and more cost-effective competitors like Solana, which has seen record highs this year, and a consistent lack of new and dedicated investors.
Lee and Joe Lubin, co-founder of ethereum, view treasury programs as a structural solution to the issue of demand, restricting supply and providing a stronger market base.
Lubin mentioned to Bloomberg in July that there is still a significant amount of ethereum available, and controlling its flow could impact supply and demand dynamics.
The financial sector’s major players are constructing their own private versions of blockchain technology, despite some opposition to this idea.
Circle Internet Group’s stablecoin network is establishing its own network that will govern by lowering fees, retaining customers in-house, and disregarding the communal infrastructure model endorsed by ethereum. If this trend of exclusivity persists, ethereum may be left out from the networks it aims to support. Stripe is expected to follow suit.
The corporate treasury manual was influenced by Michael Saylor, a prominent bitcoin advocate, who turned the strategy into a nearly bitcoin ETF in 2020 and amassed $72 billion in tokens over time.
The BitMine version is smaller, accounting for just 1% of Ether’s circulating supply. Despite its smaller size, its goal remains the same: to limit the asset to the extent that scarcity poses a challenge.
Wall Street participating in the activity
Wall Street’s investment in ethereum projects could potentially increase the token’s value from approximately $4,300 to $60,000, according to Lee.
The ethereum may not be able to achieve the same success as bitcoin in terms of corporate treasury, given that Saylor’s actions occurred during a peak in cryptocurrency prices.
Joseph Chalom of Sharplink Gaming explained to Bloomberg Television that Michael Saylor has demonstrated the effectiveness of holding the underlying asset over four years. Chalom suggested that an ETH treasury strategy could potentially increase the value of the asset for shareholders through a transparent and liquid open capital structure.
During his tenure at the largest asset manager globally, he, a former BlackRock executive, aided in the introduction of an ethereum ETF with the ETHA designation, resulting in SharpLink amassing more than $3 billion in ethereum.
Mathematics in support
Supporters claim that mathematics is effective for ethereum.
The problem is that the supply can decrease over time as a portion of each transaction fee is permanently removed.
Long-term government bonds can worsen this scarcity. Critics highlight the risk throughout the economic cycle: companies holding these bonds can offload them as quickly as they acquire them, potentially exacerbating financial crises.
“People in the cryptocurrency industry appreciate cash companies as they think they only purchase and hold,” mentioned Omid Malekan, adjunct professor at Columbia Business School. “However, it’s important to realize that there are potential scenarios, particularly in a bear market for cryptocurrencies, where these companies may begin selling their holdings.”
One major benefit of ethereum compared to bitcoin is staking, which involves locking up ethereum to support network operations and earn rewards.
This is suggested as a method to convert currency into a revenue-generating asset, resembling an activity that provides dividends rather than a fixed commodity. However, currently, the majority of conventional investors in exchange-traded funds (ETFs) are unable to directly obtain this revenue.
BlackRock, among other broadcasters, aims to introduce staking to ETHA, potentially enabling retail traders to benefit from price and income gains through the same product. The fund has amassed approximately $16 billion in a little over a year, as per a regulatory document from July.
Most individuals do not utilize Ethereum for daily financial activities such as making payments, shopping, or saving, despite the significant ethereum activity. Numerous tokenization projects on Wall Street are currently in the testing phase.
Lee indicates that the transition is already underway, citing initial actions by AI firms, payment companies, and leading financial institutions to integrate Ethereum directly.
“I observe numerous storylines leading to Ethereum becoming the dominant macro industry in the next 10 to 15 years,” he stated.
