How Low Can Stocks & Crypto Go? July 28th, 2025
Tariffs, earnings and inflation are in focus
Bottom Line: My first rule of money... Never let your money and emotions cross paths. 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’ve experienced this year.
The US stock market is history’s ultimate wealth-building machine. 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 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: +6% (+1% last week)
- S&P 500: +9% (+1% last week)
- Nasdaq: +9% (+1% last week)
Stocks were higher last week as the big three indexes continued to trade near record highs, with the S&P 500 closing at a new record high each of the past five days. This leg of the rally has been fueled by better-than-expected earnings but also on increased trade optimism with a record setting deal with Japan in place and Indonesia’s trade deal effectively hammered out as well. With the EU trade deal announced over the weekend there’s the potential for additional follow-through to start the week.
Let’s start with earnings...
As earnings reporting season kicks up, there’s been increasingly good news that’s helped support stock prices. With 34% of companies having reported, earnings growth has paced 6.4% year-over-year, which is higher than had been expected. Earnings will remain in focus throughout the week. But also, three big events...
The Federal Reserve, which President Trump not-so-coincidentally visited last Thursday, meets to decide interest rate policy this week. The market, despite Trump’s not-so-subtle overtures seeking to have the Fed lower rates, has priced in a 96% probability that they’ll remain unchanged this week. Then there’s Liberation Day 2.0 on Friday.
The potential remains for significantly higher tariffs kicking in on August 1st for all countries not named China, Japan, England, EU, Indonesia and Vietnam. There’s generally optimism that new trade deals will be announced this week. We’ll see what happens, but needless to say, what does or doesn’t happen has the potential to introduce significant volatility into the market once again.
As for cryptos...
Digital currencies were mostly flat last week as recent gains have been sustained, with potentially new base levels being established. Bitcoin is holding near recent record highs at around $118,000. While Ether slightly extended its recent gains.
Here’s a look at where they stand.
- Bitcoin: -1% last week +25% YTD
- Ether: +2% last week +14% YTD
- BitwiseETF (Top 10 cryptos): -2%, last week +18% 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: 30.50
- Historic Avg. P/E: 16.16
Translation: On earnings alone, the maximum downside risk is a 47% drop from here—a little higher than last week as stock prices rose faster than fundamentals. The market is still somewhat historically expensive; we have seen a 1% improvement in the fundamental value of the market during this market cycle.
So, What’s Your Move?
If a 47% 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 making mistakes.