Bloomberg: $1.3 billion paper loss, is Tom Lee's Ethereum gamble facing collapse?

Original Title: Tom Lee's Big Crypto Bet Buckles Under Mounting Market Strain

Original author: Sidhartha Shukla

Source:

Reprint: Mars Finance

The enterprise treasury experiment of Ethereum is collapsing in real time.

The world's second-largest cryptocurrency fell below $3,300 on Tuesday, declining in sync with the market benchmark Bitcoin and tech stocks. This drop has brought the price of Ethereum down 30% from its August peak, returning to levels seen before large-scale corporate buying, further solidifying its entry into a bear market.

According to research firm 10x Research, this reversal has led to a paper loss of over $1.3 billion for Ethereum's most aggressive corporate supporter, Bitmine Immersion Technologies Inc. This publicly traded company, backed by billionaire Peter Thiel and led by Wall Street forecaster Tom Lee, has adopted a strategy similar to Michael Saylor's Bitcoin treasury model, purchasing 3.4 million Ether at an average price of $3,909. Now, Bitmine's cash reserves are fully invested and are facing increasing pressure.

10x stated in the report: “For months, Bitmine has dominated the market narrative and the flow of funds. Now its capital is fully invested, with paper losses exceeding $1.3 billion, and there are no extra funds available.”

The report indicates that retail investors who bought Bitmine shares at a premium above the net asset value (NAV) suffered even greater losses, and the market's willingness to “catch falling knives” is limited.

Lee did not respond immediately to the request for comments, and the Bitmine representative also did not respond in a timely manner.

Bitmine's staking is far from a simple balance sheet transaction. Behind the company's accumulation actions lies a grander vision: digital assets can shift from speculative tools to corporate financial infrastructure, thereby solidifying Ethereum's position in mainstream finance. Supporters believe that by incorporating Ethereum into the asset portfolios of publicly traded companies, enterprises will contribute to the construction of a brand new decentralized economy. In this economic system, code replaces contracts, and tokens serve asset functions.

This logic drove the summer rally. Ethereum's price once approached $5000, and in just July and August, Ethereum ETFs attracted over $9 billion in inflows. However, following the crypto market crash on October 10, the situation reversed: according to data compiled by Coinglass and Bloomberg, outflows from Ethereum ETFs reached $850 million, and open interest in Ethereum futures decreased by $16 billion.

Lee predicted that Ethereum will reach $16,000 by the end of this year.

According to Artemis data, Bitmine's market capitalization to net asset value ratio has plummeted from 5.6 in July to 1.2, with its stock price down 70% from its peak. Similar to previous Bitcoin-related companies, Bitmine's stock price is now much closer to its underlying asset value, as the market reassesses the former overvaluation of crypto asset balance sheets.

Last week, another publicly traded Ethereum treasury company, ETHZilla, sold $40 million worth of Ethereum holdings to buy back shares, in order to bring its adjusted net asset value (mNAV) ratio back to normal levels. The company stated in a press release at the time: “ETHZilla plans to use the proceeds from the sale of the remaining Ethereum for further stock buybacks and intends to continue selling Ethereum to buy back shares until the discount relative to net asset value returns to normal.”

Despite the price drop, Ethereum's long-term fundamentals seem to remain strong: the on-chain value it processes still exceeds that of all competing smart contract networks, and its staking mechanism endows the token with both yield and deflationary properties. However, as competitors like Solana gain momentum, ETF fund flows reverse, and retail interest wanes, the narrative that “companies can stabilize cryptocurrency prices” is gradually losing effectiveness.