Tom Lee: Ethereum becomes the second-largest "war-time" asset since the Middle East conflict

On April 6, 2026, Fundstrat co-founder Tom Lee shared his view: since the escalation of the Middle East conflict, Ethereum has become the world’s second-best performing asset, with Bitcoin ranking third, and both have significantly outperformed the stock market overall. This assessment is not an isolated market commentary; it is based on an analytical framework built around the scale of fiscal spending, the transmission of energy price shocks, and the patterns of historical war cycles.

Against a macro backdrop of expanding defense spending in the range of hundreds of billions of dollars per month and ongoing geopolitical tension, the relative performance of crypto assets has attracted widespread attention. This article will systematically break down the logic chain behind this judgment, moving from factual assertions and data analysis to a review of market narratives and multi-scenario projections.

Three Major Claims and Their Factual Basis

Tom Lee’s view published on April 6, 2026 contains three core claims:

Asset performance rankings. Since the escalation of the Middle East conflict, Ethereum has been the second-best performing global asset, while Bitcoin ranks third. The top spot is held by a leading safe-haven asset; both have dramatically outperformed the stock market.

A comparison of the scale of war spending and energy shock. Current war expenditures are about $30 billion per month and could rise to a scale of $100 billion per month in the future. By comparison, the impact of rising energy prices on consumers is relatively limited—every $10 increase in oil prices corresponds to only about $4 billion to $5 billion per month in consumption pressure.

Configuration logic. Against the backdrop of high fiscal spending and energy volatility, the allocation value of crypto assets as “liquidity and risk assets” is increasing.

Asset Pricing Logic During Conflict Cycles

Time frame of the Middle East conflict. This round of escalation began in late February 2026, when U.S. and Israeli military actions targeting Iran intensified. As of early April 2026, the conflict has been ongoing for about six weeks, and significant differences remain among the parties on issues such as shipping security in the Strait of Hormuz and Iran’s nuclear facilities.

Tom Lee’s historical analysis framework. In an earlier April 1 interview, Lee proposed a core historical regularity: since 1900, stock markets often bottom out within the first 10% of the war’s progression. The logic is that the greatest downside pressure comes from the uncertainty and panic-driven selloff during the early stages of war, after which the market gradually adapts to the new geopolitical reality.

Extension of this framework’s application. Lee extends this historical regularity from the stock market to the crypto asset market, arguing that the recent relatively strong performance of Ethereum and Bitcoin could be an early signal of capital repricing amid the continued conflict.

Causal chain breakdown: conflict erupts → fiscal spending expands → changes in the liquidity environment → high-beta assets (crypto assets) benefit relatively → Ethereum and Bitcoin outperform traditional assets.

Verification from a Multi-Dimensional Perspective on “Wartime Asset” Performance

The following data helps explain the logic behind Lee’s judgment. Data is as of April 7, 2026.

Ethereum price and market capitalization data (Source: Gate market data)

Over the past 30 days, Ethereum has shown an upward trend, with a cumulative gain of +3.95%, while the stock market during the same period has fluctuated more significantly under geopolitical pressure. On a 1-year basis, Ethereum’s gain reached +14.44%, reflecting resilience relative to traditional assets.

A differentiated signal from institutional fund flows. According to data from early January 2026, after experiencing outflows of more than $6 billion at the end of 2025, the first trading day of 2026 saw approximately $645 million in net inflows in total for Bitcoin and Ethereum ETFs. Institutional investors showed some signs of returning at the beginning of the year. Notably, cumulative net inflows into Ethereum ETFs had previously exceeded $5 billion, indicating that institutional demand is starting to take on a “stable base” attribute.

Structural support from on-chain activity. In Q1 2026, Ethereum’s network transaction volume reached 200.4 million transactions, an increase of about 43% month-over-month, setting a quarterly all-time high. The number of active addresses in the quarter was 12.6 million, and stablecoin market cap during the same period was close to $164.4 billion. These on-chain indicators suggest that even amid price volatility, the actual usage demand for the Ethereum network is still expanding.

Review of the Market Narrative: Distinguishing Verifiable Logic from Market Sentiment

When assessing the narrative that “Ethereum becomes the second-largest ‘wartime’ asset,” it is necessary to critically review the basis of its logic.

Verifiable logic support:

• Fiscal stimulus logic. Lee’s core arithmetic is clear: $30 billion per month in war spending is, in substance, fiscal stimulus. If the conflict expands to $100 billion per month, the scale of this stimulus would be even more significant. The consumption pressure of roughly $4 billion to $5 billion per month for every $10 increase in oil prices is far smaller than the spending incremental, and the macro net effect tilts toward expansion.
• Validation of historical regularities. Fundstrat’s statistics on war cycles since 1900 show that stock markets often bottom out in the first 10% of the war’s progression. This pattern has been validated across multiple cases such as World War II, the Vietnam War, and the Gulf War.
• Improvement in the liquidity environment. The expansion of defense spending combined with still relatively accommodative financial conditions creates a liquidity environment favorable for high-beta assets. In such an environment, Ethereum and Bitcoin’s attributes as liquidity risk assets are amplified.

Narrative controversy points:

• A divergence from institutional fund outflows. From November 2025 to February 2026, U.S. spot Ethereum ETFs recorded cumulative net outflows of about $2.5 billion. If institutions truly view crypto assets as “wartime” allocation targets, why did there still appear to be continued capital withdrawal over the same period? This contradiction weakens the narrative’s consistency.
• Consideration of conflicts of interest. Lee also serves as chairman of BitMine Immersion Technologies. The company recently disclosed adding $133 million worth of Ethereum, bringing its holdings to more than $9 billion. Market participants evaluating his views need to factor in how this conflict of interest may influence his stance.
• Divergences in different analysts’ timelines. On-chain analyst Willy Woo believes the true bottom occurs in April 2027, directly negating Lee’s optimistic judgment; analyst Benjamin Cowen argues that it is too early to declare the end of the bear market in 2026 and expects Bitcoin could fall below $60,000. These differing cycle views indicate that the market has substantial disagreement.

Industry Impact Analysis: How the Narrative Changes Asset Allocation Logic

Impact on crypto asset positioning. Lee’s narrative moves crypto assets from “speculative assets” to “macro hedging liquidity assets.” If this narrative gains institutional investors’ recognition, it could affect the weighting of crypto assets in asset allocation—shifting from a “peripheral optional allocation” to a “core liquidity exposure.”

Differentiated impact on Ethereum. Ethereum’s ranking above Bitcoin (second vs. third) reflects the market’s differentiated pricing of the two crypto asset attributes: “smart contract platform” and “store of value.” Ethereum’s Layer 2 ecosystem expansion, stablecoin infrastructure, and the upcoming Pectra upgrade provide structural fundamental support. The Pectra upgrade has already completed final testing on the Hoodi testnet; if it passes the ensuing roughly 30-day monitoring period successfully, it will be activated on the mainnet.

Signal meaning for traditional assets. If crypto assets outperform stocks and gold during the war cycle, it would challenge the “hedge vs. risk” dual framework used for traditional investment portfolios. Lee once said plainly: “Since the war began, cryptocurrencies have performed well, while gold has actually performed poorly.” This judgment itself constitutes a challenge to traditional asset classification.

Multi-Scenario Projections: The Duration of the Conflict Determines Asset Trends

Scenario one: the conflict ends in the short term

If the Middle East conflict ends via diplomatic channels within the next 2–3 weeks, Lee has said the market reaction would be “explosive,” and the stock market could see a V-shaped rebound. In this scenario, the “wartime” premium on crypto assets may fade quickly, and capital may flow back into traditional risk assets; as a result, the relative excess returns of Ethereum and Bitcoin could narrow. The risk is that in this scenario, profit-taking could create short-term downward pressure on the crypto market.

Scenario two: the conflict persists in the long run

If the conflict expands to the $100 billion per month spending scale described by Lee, the fiscal stimulus effect would be further amplified, and the liquidity environment would remain loose. In this scenario, allocation demand for Ethereum and Bitcoin as high-beta assets could continue to rise. Under these conditions, the “wartime” narrative for crypto assets would be continuously reinforced, and institutions may reassess their portfolio allocation weights. The risk point is that the uncertainty caused by a prolonged war could suppress long-term capital deployment willingness, and whether institutional funds can keep flowing in remains uncertain.

Scenario three: conflict spirals out of control, triggering systemic risk

If the conflict spreads to global supply chains, energy corridors, or financial settlement systems, the macro environment will shift toward systemic risk aversion. In this scenario, all risk assets (including crypto assets) could face broad-based selloffs. Although the “digital gold” narrative for crypto assets might be reconsidered in such extreme circumstances, historical experience suggests that during systemic panic the correlation among all asset classes rises sharply, leaving crypto assets unable to stay unaffected.

Conclusion

Tom Lee’s view that “Ethereum becomes the second-best performing asset since the Middle East conflict” is built on a quantifiable macro framework: $30 billion per month (potentially rising to $100 billion) in war spending constitutes fiscal stimulus, and crypto assets as “liquidity risk assets” gain excess returns in this environment. The foundational logic of this narrative is verifiable, but the real contradiction of institutional fund outflows and Lee’s own conflicts of interest remind market participants to maintain independent judgment.

Ethereum’s on-chain activity, stablecoin infrastructure, and the upcoming technical upgrade provide fundamental support beyond short-term narrative momentum. However, the conflict’s ultimate trajectory, institutional funds’ continuing willingness, and the evolution of the macro environment will jointly determine whether this narrative can turn into a long-term trend.