Tom Lee: Crypto Market May Be Forming a Bottom, Ethereum Has Seen 7 Occasions of >60% Drawdown in Past 8 Years with V-Shaped Recovery

Tom Lee, chairman of Ethereum treasury firm BitMine, stated that the crypto market may be forming a bottom, citing historical patterns. He highlighted that Ethereum has experienced seven drawdowns of over 60% in the past eight years, each followed by a V-shaped recovery. The current scenario, including MicroStrategy's rebound, appears to align with this historical trend.

Ethereum has recently faced a sharp decline, with prices dropping roughly 40% in ten days. The cryptocurrency briefly dipped below $2,000, triggering significant unrealized losses for large holders like BitMine. Despite the sharp drop, Lee emphasized that BitMine has no plans to liquidate its ETH holdings, which total approximately 4.28 million tokens.

BitMine's ETH position, which is largely staked, has led to $6–8 billion in unrealized losses as of February 8, 2026. However, the firm is operating with a debt-free balance sheet and continues to generate income from staking.

Why Did This Happen?

Ethereum's recent sell-off was driven by broader market weakness and a lack of leveraged capital following the October market crash. Large holders, including on-chain whale Trend Research, have also been offloading assets, exacerbating downward pressure.

Tom Lee attributed the broader crypto market weakness to deleveraging, particularly in the derivatives space, as well as capital rotation into other asset classes like precious metals. He also noted that Ethereum's fundamentals remain strong, with growing network activity and adoption by institutional players.

How Did Markets React?

The market response has been mixed. BitMine Immersion (BMNR) shares fell in recent sessions, reflecting investor uncertainty about the firm's balance sheet and exposure to Ethereum. However, Lee defended the firm's strategy, comparing it to an index fund designed to track and outperform Ethereum over a full market cycle.

Ethereum's price rebounded slightly after hitting $2,000, rising to around $2,265 as of February 8. Retail sentiment on platforms like Stocktwits remained neutral, while technical indicators and advisor models suggested potential support levels for the cryptocurrency.

What Are Analysts Watching Next?

Analysts are closely watching whether Ethereum and broader crypto markets will follow the historical V-shaped recovery pattern. BitMine's continued accumulation of ETH, including a recent purchase of 41,788 tokens, indicates a belief in the asset's long-term value.

Tom Lee also highlighted BitMine's $200 million investment in MrBeast's media company as a strategic move with potentially high returns. This partnership is part of the firm's broader efforts to connect Ethereum with younger demographics and expand its brand influence.

Institutional adoption and network usage metrics are also key indicators. According to Lee, Ethereum's active address count and transaction volume are up significantly year-over-year, reinforcing the asset's utility and long-term appeal.

As Ethereum and the broader crypto market continue to stabilize, investors will be monitoring both on-chain activity and macroeconomic factors to assess the likelihood of a sustained recovery.