How Low Can Stocks & Crypto Go? April 21st, 2025 - Driven By Braman Motorcars
Buckle Up: The Markets Are Testing Your Nerves—Here’s What You Need to Know
Bottom Line: My first rule of money... Never let your money and emotions cross paths. This isn’t a doomscroll though after the past week you might feel that you’re living through one. This story is a weekly wake-up call to show you the near-worst-case scenario for stocks and crypto. Why? So, you can plan your financial future with a cool head, not a racing pulse. The odds of a near-worst case outcome almost certainly won’t happen, however if your plan accounts for it – it can help you manage through even the most trying markets like what we’re experiencing right now.
The US stock market is history’s ultimate wealth-building beast. Crypto? It’s minted millionaires from early believers. Fact: Over 90% of the time, investors who try to “time” the market end up poorer than if they’d just stuck to their original investments. This is about dodging that trap.
Here’s how the big three indexes are faring in 2025 so far:
- DOW: -8% (-3% last week)
- S&P 500: -10% (-1% last week)
- Nasdaq: -16% (-3% last week)
Trade war? Check. Federal Reserve war? Check. Earnings season? Check. All of those currently present challenges. As I discussed on Friday, the strength, or the lack thereof of the U.S. Dollar – which has now declined by greater than 4.5% since the Liberation Day announcement tariffs – combined with the potential impact of the tariffs themselves, is highly problematic. That takes us to the Federal Reserve. Fed Chair Jerome Powell said last week that the Fed wasn’t going to make a move on cutting interest rates anytime soon because of inflationary concerns about tariffs. That’s led to a war of words from Trump directed at Powell...and then there’s earnings...what ordinarily would be the most important driver of stocks. They’ve not been great either...
Expectations heading into earnings season were for growth of 7.3%. Thus far, with 12% of companies reporting, they’ve come up a bit short with growth of 7.2%. Put all of this together and you have a stock market correction/bear market that continues to vacillate day by day.
This week is an important week for earnings, sure. But it’s also an important week for the Trump administration to make headway with trade deals and begin to restore greater confidence in the U.S. economy and thus the Dollar as much as anything. President Trump’s approval rating on the economy – which used to be his greatest strength – is now the weakest it’s been in either term as president. It will get worse from here if inflation gets worse from here which will happen without near-term progress on the trade war.
As for cryptos...
Bitcoin performed well in the mist of massive volatility again last week. While it’s been a rough run for cryptos to start the year, last week’s price action in the mist of extreme volatility may have been a turning point for the space. The argument had long been made, by crypto advocates, that top-tier tokens like bitcoin were essentially “digital gold”. A haven during time of volatility. We’d not seen any evidence of that being the cast until last week. Cryptos performed similarly to gold generally holding up far better than the stock market. Here’s a look at where they stand.
- Bitcoin: flat last week, -11% YTD
- Ether: -1% last week -53% YTD
- BitwiseETF (Top 10 cryptos): -1% last week, -25% YTD
I can’t value cryptos because they have no inherent value. Stocks, though? They’ve got bones. Let’s break down the S&P 500:
- Current P/E: 26.28
- Historic Avg. P/E: 16.14
Translation: On earnings alone, the maximum downside risk is 39% drop from here—flat with last week as fundamentals were in line with stock prices over the past week. The market is still slightly historically expensive; however, we have seen a 9% improvement in the fundamental value of the market during this correction cycle.
So, What’s Your Move?
If a 39% dip wouldn’t derail your life, you’re probably golden. If it would? Time to call a pro and build a plan that doesn’t leave you sweating bullets—or broke.
The markets don’t care about your feelings. Don’t let them hijack your wallet.