Why The Ethereum Complex Stands To Win

Summary Ethereum’s utility is real: the securities industry is adopting it as a core platform, driving a paradigm shift via tokenization. Tokenization will unlock liquidity in private assets, with Ethereum’s blockchain and smart contracts as the backbone for this transformation. Best ways to play this trend: consider buying Ether directly or through ETFs, or invest in Ether Treasury companies like BMNR and SBET. This is a high-risk, high-reward opportunity—volatility is inevitable, but the upside for well-managed positions could be substantial. DISCLAIMER: This note is intended for US recipients only and, in particular, is not directed at, nor intended to be relied upon by any UK recipients. Nothing in this note is intended to be investment advice, nor should it be relied upon to make investment decisions. Please read our full disclaimer here . This Time With Real Utility Whether you are a crypto-skeptic, crypto-native, or, like most people, merely crypto-curious, I believe now is the time to get smart about the Ethereum complex. Don’t switch off. This is important, and not because of NFTs, Bored Apes, Lambos, or any of that nonsense. It’s important because the securities industry is embracing Ethereum as a fundamental platform, and I think that it is serious about doing so, and I think there is a good deal of money to be made by investing behind that trend. Tokenization You may have heard of ‘tokenization’ and it may sound redundant, scammy, or both. It’s not. Tokenization is a paradigm shift in the asset management industry. Today, tradable securities all reside within a set of financial institutions that have existed for decades, more than a century in some cases. Brokerages, clearing houses, custodians, all these elements of the financial plumbing are set up to deal with common stocks issued by joint-stock companies; with ETFs issued by fund managers; with options created from those stocks and ETFs; and with futures created by market-makers enabling real-world producers and traders alike to hedge their exposures. Taken together, this is one giant pool of liquidity. Liquidity, though, is the gift that keeps on giving. If you are an asset manager, a broker, a marketmaker, an investor, an asset owner, or any part of the chain – you always want more liquidity. And the next source of liquidity is to open up private pools of assets to cash that cannot, today, invest in those pools. You’ve seen the news about 401k plans being opened up to invest in private funds – this is one part of the trend. One of the primary ways this will happen is that currently non-traded assets, those that do not fit easily within the financial plumbing of public markets, have to be represented in a way that can mimic the common-stock complex. This is tokenization. A “token” is simply a digital representation of part of an asset (i.e. a part claim on the asset – like a common stock) or some other right as regards the asset. Let’s say the French state decided to monetize the Palace of Versailles. The Palace could be tokenized by creating 1m part-shares in the Palace itself, claims on ownership like a common stock; and/or by creating 10 million memberships of the Palace, entitling the holder to one free visit per year. These rights – a claim on the asset, and the opportunity to visit the asset without further cost – could be combined in a single token. Tokens of this nature offer far more flexibility to the asset owner than do common stocks. Tokens may enable the asset owner to monetize an asset without surrendering any ownership whatsoever. (Tokenization is great news for asset owners. ) Tokenization needs a database of records where the rights and obligations afforded to each token, and the ownership of each token, can be recorded. And the database of choice for this is going to be, in the main, the Ethereum blockchain. Why? Because this particular blockchain was built with “smart contracts” (also known as “contracts” for non-crypto-bros) in mind from day one. In the 1980s, if you had a big dataset to run and manage, you likely paid AT&T to run it on the Tuxedo transaction processing system, and you paid them in U.S. Dollars. In the 2020s-2030s, with a big dataset of tokens to run and manage, you are likely to be paying the Ethereum blockchain to do so, and since you can only pay the blockchain in the Ether crytpocurrency, you are going to need to get some Ether. (Another translation for non-crypto-natives – don’t be blinded by terminology – when you hear the phrase “gas fees” for Ethereum, have your brain auto-translate to “transaction processing fees” – it’s the same thing.) This is going to happen. It’s going to happen, not because some bored teenagers want it to happen. It’s going to happen because the asset management industry wants it to happen. (That’s why Larry Fink is such a zealot on the topic of Ethereum .) Some Ways To Try To Make Money From The Rise Of The Ether Complex Like any new departure in finance, the road to riches will be littered with ruined speculators. This trend is no different. Fortunes will be made and hearts will be broken, and investors should manage their exposure and risks accordingly. But in essence, these are the ways I believe opportunity lies. Buy Ether, in its native form on crypto exchanges or (my personal preference) in fund-managed format, be that the BlackRock ETHA ETF or the older (and higher fee burden) ETHE from Grayscale. Buy one or more of the new “Ether Treasury Companies”. This is a big name for an old concept, that of the investment trust. Names such as BitMine Immersion Technologies, SharpLink Gaming, BTCS and others are all raising capital to acquire increasing quantities of the Ether cryptocurrency. As with Bitcoin, supply of Ether is limited by design, so if it is being hoovered up, you would expect the supply to restrict, the price to rise, and the benefits to accrue to Ether Treasury Companies’ shareholders. You’ve seen this movie before in the shape of MicroStrategy ( MSTR ) which has been a more or less solo at-scale player doing this in Bitcoin. The vertical rise of MSTR stock has attracted wannabes; the two highest profile names to be involved in these Ether Treasury companies are Tom Lee of FundStrat Advisors, and Peter Thiel, the well-known investor. They are now Chairman and a 9%+ shareholder, respectively, in BitMine Immersion Technologies ( BMNR ). I Can’t Tell You What To Do. You have to make your own decisions, of course, but personally, I have been building positions in: ETHE (the Grayscale Ether ETF) BitMine Immersion Technologies ( BMNR ) – because Tom Lee and Peter Thiel, and it because the company now owns c. $1bn of Ether. SharpLink Gaming ( SBET ) – the second-largest holder of Ether amongst the treasury companies. Then a smattering of others, including BTCS ( BTCS ), GameSquare Holdings ( GAME ) and BitDigital ( BTBT ). If you are thinking about position sizing, my own view is that BMNR and SBET are the likely winners. They have the personalities aboard (Lee / Thiel in the case of the former, and cofounders of the Ethereum project in the case of the latter), and they are already placed 1 and 2 in the arms race to acquire increasing amounts of this scarce digital commodity. But This Is All Nonsense I don ’ t think it is. I think it ’ s a real thing. And I think that played correctly, excellent returns can be made, but this is nothing like owning the S&P500, so if you choose to play, you will need to manage risk differently to large index or major single-stock holdings. Volatility will be a feature, not a bug; there will be consolidation and failure of the weak companies along the way; a global event may crater the price of Ether and take these stocks with it. My own view is the prize is worth it; but it ’ s not my first rodeo, I ’ ve been a technology investor my entire career, spanning from dot-com boom and bust through Internet 2.0, Web3, AI, and a hundred other yo-yo themes. Good luck if you choose to celebrate! Alex King, Cestrian Capital Research, Inc., 17 July 2025.

Source: Seeking Alpha