More than a decade ago, Fundstrat told clients willing to venture into crypto to put just 2% of their portfolio into bitcoin. Then they basically left it alone. According to Fundstrat founder and Bitmine Chairman Tom Lee, that tiny allocation has since ballooned into more than 85% of the average portfolio that followed the advice, not because clients kept buying, but because bitcoin did the heavy lifting. Now Lee thinks the digital currency market may be gearing up for another big run.
Tom Lee Says a 2% Bitcoin Bet Quietly Became an 85% Portfolio
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Key Takeaways
- Fundstrat’s original 2% bitcoin allocation grew to more than 85% without clients buying more.
- Tom Lee says 80%-90% of investors still own no crypto as Bitmine jumped 99% in Q3.
- Lee sees a bullish 12 months for crypto as leverage returns and the 4-year cycle turns.
The 2% Bitcoin Bet That Became 85%
Imagine putting $2 out of every $100 in your portfolio into something plenty of people thought was ridiculous, leaving it there for more than a decade, and eventually discovering it had swallowed nearly the entire account. According to Lee, that is essentially what happened to Fundstrat clients who followed the firm’s early bitcoin allocation strategy.
At the time, Fundstrat began advocating a modest 2% position more than a decade ago, when bitcoin traded below $1,000, and skepticism was lurking everywhere.
“Our original recommendation for a 2% position, for the average account for Fundstrat that actually took our advice, is now over 85% of their portfolio,” Lee told Wealthion during an interview released on Friday. “They bought 2% and bitcoin’s gone up a lot in price.” That is the wild part. The clients didn’t keep piling money into bitcoin. An allocation deliberately small enough to limit the damage if the idea went off the rails eventually became the dominant asset simply because bitcoin appreciated so much.
Most Investors Still Have No Crypto
Speaking with Wealthion, Lee estimated that somewhere around 80% to 90% of the audience likely has no exposure to crypto at all, despite many investors owning gold and participating heavily in stocks. His question for that crowd was considerably less technical than a discussion about blockchains, monetary policy, or tokenization.
Lee stressed:
“Do they want to be right or do they want to make money?”
Lee’s argument isn’t that investors need to understand every nut and bolt beneath bitcoin before owning it. He compared that reluctance with other technologies people routinely invest in without completely understanding how they work, including electric vehicles and large language models. Fundstrat’s original answer to that uncertainty was 2%, small enough to limit the damage if bitcoin failed but large enough to matter if it worked. For clients who took that bet, it ended up mattering a great deal.
Crypto’s Leverage Got Smoked
The timing of Lee’s comments matters because he believes crypto has already gone through one of the uglier parts of its cycle. Lee described the current period as bitcoin’s fourth “crypto winter,” comparing it with a bear market in stocks where prices fall, leveraged traders get wiped out, and eventually some longtime believers become so frustrated that they simply walk away.
Lee calls that last part “rage quitting,” explaining that “some people lose so much money that they get angry and they quit.” According to Lee, a major deleveraging event hit crypto in October, followed by another after the Iran war began. Much of the debt that had accumulated throughout the system has since been cleared away, and Lee views that cleanup as characteristic of previous crypto bottoms.
Lee Thinks the Next 12 Months Look Different
Lee explained that crypto-linked equities have already become a major contributor to Russell 1000 performance during the third quarter. Four of the index’s 21 best-performing stocks are crypto stocks, he said, while Bitmine itself has climbed 99%. At the same time, Lee sees leverage beginning to return in places such as Korea, while Wall Street’s embrace of blockchain, stablecoins, and tokenized securities is opening a market that barely existed during previous cycles.
Lee also believes financial services could become one of the industries most heavily reshaped by artificial intelligence (AI) and blockchain technology, with crypto serving as a tool for rebuilding aging financial infrastructure. He argued that if $100 trillion worth of assets eventually becomes tokenized, capturing just 1% of that activity could represent a $1 trillion net income opportunity, enough in his view to create a great deal of new companies and wealth.
There are still plenty of speed bumps in the cards. Lee expects markets could face a correction, inflation remains contentious, and the CLARITY Act is still working its way through Washington. But with crypto’s four-year cycle approaching what Lee considers its bottom, leverage returning after a major wipeout, and Wall Street moving deeper into blockchain, he told Wealthion, “I think it’s going to be a really bullish period for crypto for the next 12 months.”
That brings the story back to those Fundstrat clients. They didn’t begin with an 85% bitcoin portfolio. They began with 2%, and more than a decade later, Lee’s point is that sometimes the smallest position in an account doesn’t stay small. With an estimated 80% to 90% of investors he referenced still holding no crypto at all, he thinks that old 2% experiment may be worth reconsidering as another crypto cycle takes shape.
