How Low Can Stocks & Crypto Go? July 21st, 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 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: +5% (flat last week)
- S&P 500: +7% (+1% last week)
- Nasdaq: +8% (+2% last week)
Stocks were flat to higher last week as the big three indexes continue to trade near record highs despite concerns of significantly higher tariffs kicking in on August 1st for all countries not named China, England, Indonesia (which reached an agreement with the Trump administration last week) and Vietnam. There’s generally optimism that new trade deals will be announced over the next week and a half, with the buzz surrounding the EU being the loudest currently.
Last week’s Consumer Price Index Report was, of course, a huge part of the broader conversation as inflation ticked up from 2.4% in May to 2.7% in June – which is still below the 3% mark President Trump inherited but is obviously trending in the wrong direction and essentially eliminated the chance of the Fed cutting interest rates when they meet next week. Investors are pricing in an 96% chance interest rates will remain unchanged for now.
As earnings reporting season kicks up, there’s been increasingly good news that’s helped support stock prices. With 12% of companies having reported, earnings growth has paced 5.6% year-over-year, which is higher than had been expected. They’ll remain in focus throughout the week.
As for cryptos...
The performance of digital currencies was a standout story again last week, with Bitcoin holding near recent record highs at around $118,000. While Ether surged in a massive rally as cryto investors sought out perceived value. Ether had been the most notable laggard in the space this year, however after last week’s rally that’s no longer the case.
Here’s a look at where they stand.
- Bitcoin: +1% last week +26% YTD
- Ether: +24% last week +12% YTD
- BitwiseETF (Top 10 cryptos): +2%, last week +20% 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: 30.03
- Historic Avg. P/E: 16.16
Translation: On earnings alone, the maximum downside risk is a 46% drop from here—flat with last week as stock prices and fundamentals were largely unchanged. 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.