How Low Can Stocks & Crypto Go? January 5th, 2026
Venezuela and Congress are in Focus to start the new year
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 even the most trying markets like what we’ve experienced this year.
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 fared in 2025:
- DOW: +15% (with reinvested dividends)
- S&P 500: +17% (with reinvested dividends)
- Nasdaq: +21% (with reinvested dividends)
It was another great run for stock market investors in 2025 with above average performance for all major indexes. This came about as the AI boom combined with President Trump’s pro-growth policies led to an economy that outperformed expectations (with GDP growth pacing 4% growth over the previous two quarters) and corporate earnings doing the same as tariff fears were overblown and productivity gains through AI also began to net results for many companies.
We’ve entered 2026 with an interesting set of circumstances, none the least of which involves what will be in Venezuela with this weekend’s ouster of the country’s illegitimate president. The big issues to watch early this year include congresses January 30th funding deadline to avoid another partial government shutdown – and also what specifically might happen with health insurance policies. COVID-era ACA subsidies have now lapsed, and Senator Rick Scott has proposed the “More Affordable Care Act” which seeks to reform the current ACA program. This issue will be central to whatever will or won’t happen congressionally this month.
As for Venezuela, while there’s near term uncertainty surrounding a transition for the country’s leadership, the U.S. role, energy production, etc. following the ouster of Maduro, the effect economically is almost certain be to positive in short order. Venezuela’s nationalization of the energy industry aided in the collapsing of the country. While sitting on the world’s largest oil reserves, the country was only producing about a fourteenth, or only about 7%, of what the United States produces. The upside is tremendous and as that’s realized, the impact on energy prices and stability will be exceedingly positive.
Now for valuation calculations – starting with cryptos...Here’s a look at where they stand.
- Bitcoin: -7% in 2025
- Ether: -10% in 2025
- BitwiseETF (Top 10 cryptos): -4% in 2025
After years of strong performance, cryptos proved to be significant losers throughout the course of 2025 with gold and silver benefitting with record setting gains as nervous investors seeking safety opted for precious metals over digital currencies.
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: 30.95
- Historic Avg. P/E: 16.19
Translation: On earnings alone, the maximum downside risk is a 48% drop from here—flat with a week ago as stock prices and fundamentals were close to unchanged. The market is historically expensive as it’s priced near the highest multiple of the current bull market cycle.
So, What’s Your Move?
If a 48% 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.