How Low Can Stocks & Crypto Go? October 20th, 2025
The partial government shutdown, Earnings and Tariff Polices 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 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 are faring in 2025 so far:
- DOW: +9% (+1% last week)
- S&P 500: +14% (+1% last week)
- Nasdaq: +18% (slightly higher last week)
The past week featured a couple of welcomed events for the financial markets, the historic Israel-Hamas peace accord, and a strong start to the third quarter earnings season, countered by the partial government shutdown extending into a third week along with credit concerns in the banking sector, along with whatever will be of the latest China-Trump trade negotiations. In the end, strong earnings and optimism won out, and stocks climbed the wall of worry higher as did gold as it powered to new record highs above $4300 per ounce. There are two interesting notes about that dynamic.
It’s unusual for gold and stocks to be more or less trading together on the upside to the extent we’ve seen this year with gold with a series of record highs having been achieved for each. Also, somewhat notably, cryptos, which had been performing alongside gold and stocks, have underperformed over the past couple of weeks. This may indicate that current investors in gold are making a risk adverse trade away from crypto which has been billed by its bulls as “the new gold”. As for earnings...
Through Friday, 12% of companies reported earnings. The average increase in earnings year-over-year is 8.5%, a number pacing ahead of the 7.9% increase in earnings expected coming into the reporting season.
As for cryptos...
Here’s a look at where they stand.
- Bitcoin: -5%, +14% YTD
- Ether: +3% last week, +17% YTD
- BitwiseETF (Top 10 cryptos): -12%, last week +13% 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: 30.88
- Historic Avg. P/E: 16.18
Translation: On earnings alone, the maximum downside risk is a 48% drop from here—slightly higher than last week as prices rose faster than fundamentals. 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.