Tom Lee's Bitmine Continues to Buy Ethereum, Now Holds 4.8% of Its Total Supply. Should Investors Follow His Lead and Buy ETH?

Tom Lee, the founder of Fundstrat Global Advisors and prolific crypto bull, joined Bitmine (NYSE: BMNR) as its chairman last year. Under Lee, Bitmine evolved from a Bitcoin (CRYPTO: BTC) miner into the world's largest corporate holder of Ethereum (CRYPTO: ETH).

As of Aug. 10, Bitmine held 5.81 million Ether tokens, or 4.8% of its entire supply of 120.7 million tokens. It also reiterated its goal of acquiring 5% of Ether's supply. Should investors follow Lee's lead and buy more Ether, which has declined nearly 60% over the past 12 months?

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Why is Lee so bullish on Ether?

Lee's support of Ether generates a lot of buzz because he was one of the few analysts who told investors to buy Bitcoin (CRYPTO: BTC) in 2017, when it was still trading at about $2,600. Bitcoin has gone through some wild swings since then, but it's trading at around $63,000.

Lee began telling investors to buy Ether in late 2024, when it was trading at about $3,400. Ether now trades at roughly $1,900, but Lee insists it will surge to $22,000 within the next few years and $62,000-$250,000 over the long term.

Lee expects several catalysts to fuel that rally. As the largest developer-oriented blockchain for smart contracts and decentralized apps, Ethereum will grow as more stablecoins are minted and more tokenized real-world assets (RWAs) are stored on its network. As more AI agents take over economic transactions, they'll need to use public, neutral, and secure blockchains -- like Ethereum -- to handle their identity verification and machine-to-machine payments.

As that expansion occurs, Ether's value will increase, attracting more attention from institutional investors. With a market cap of $226 billion, Ethereum is still tiny compared to Bitcoin, which is valued at $1.26 trillion. For now, fears of interest rate hikes and other macro challenges are compressing Ether's valuation -- but it could soar once those headwinds dissipate.

Should investors follow Lee's lead?

Lee was right about Bitcoin, but it also suffered massive drawdowns over the past nine years. We also shouldn't blindly assume Lee is right about Ether, since past performance never guarantees future gains.

That said, Ether has much clearer long-term catalysts than many other altcoins, and it's a compelling long-term play on the growing usage of decentralized apps, AI agents, and tokenized assets. Its spot price exchange-traded funds (ETFs), which were initially approved two years ago, could also attract more investors as the crypto market warms up again. So while I wouldn't buy Ether as aggressively as Bitmine, I'd be willing to accumulate more of the world's second-largest cryptocurrency in this wobbly market as the bulls look the other way.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.