How Low Can Stocks & Crypto Go? July 7th, 2025
Record highs in advance of the BBB signing
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 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% (+3% last week)
- S&P 500: +7% (+2% last week)
- Nasdaq: +7% (+2% last week)
It was another incredible week for the financial markets culminating with the big three indexes all closing out the abbreviated trading week at all-time highs. Peace held between Iran and Israel, the jobs report came in much stronger than expected, and with optimism about President Trump’s agenda passing within the BBB. One of the question marks entering this week is whether there’s continued following through after the massive three-month rally to the current record levels, or if the signing of the BBB will turn out to be a “sell the news event” for investors looking for the markets to take a breather.
Thursday’s jobs report not only came with over 30,000 additional jobs created during June than had been expected but also with a decline in the unemployment rate to 4.1%, the lowest since January, which was also unexpected. With President Trump’s agenda having now passed, attention will begin to turn towards inflation and the Fed once again. Currently investors are pricing in a 95% chance that the Fed will continue to leave interest rates unchanged in this month’s meeting. As for cryptos...
Bitcoin backed away from what was close to an all-time high recently, near $110,000, and it was a mixed bag for digital tokens generally. Here’s a look at where they stand.
- Bitcoin: flat last week +15% YTD
- Ether: +2% last week -25% YTD
- BitwiseETF (Top 10 cryptos): +5%, last week +8% 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: 29.92
- Historic Avg. P/E: 16.15
Translation: On earnings alone, the maximum downside risk is a 46% drop from here—1% higher than last week as stock prices rose faster than fundamentals. The market is still somewhat historically expensive; we have seen a 2% improvement in the fundamental value of the market during this market cycle.
So, What’s Your Move?
If a 46% 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.