How Low Can Stocks & Crypto Go? January 12th, 2026
Venezuela, Congress, Fed Chair Jerome Powell and Earnings are in focus entering this week...
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 have fared in 2026:
- DOW: +2%
- S&P 500: +2%
- Nasdaq: +2%
Stocks have continued to outperform to start the year. This past week’s first full week of trading produced more gains, fresh record highs to finish the week for the major indexes and increased optimism about the economy this year. Specifically, economic data show very little impact to the overall economy which had been growing at a greater than 4% rate entering the fourth quarter, from what turned out to be the longest partial government shutdown in U.S. history. This showed up in the ADP and BLS jobs reports last week which showed slow but steady growth in employment to wrap up the year with a declining unemployment rate driven by Americans soaking up job openings as opposed to illegal immigrants. Also, the oil market remained stable following the ouster of Venezuelan dictator Nicolas Maduro, as Chevron was able to export five times as much oil out of the country last week as they had been most recently.
This week will begin to place corporate earnings in focus in addition to key inflation data from the CPI on Tuesday and PPI on Wednesday – with retail sales numbers as well. Also, it’s a big week for Congress as January 30th remains a key date for funding resolutions to potentially avoid another partial government shutdown. Another big issue investors are watching. The announced criminal investigation into Federal Reserve Chairman Jerome Powell related to renovations at the Federal Reserve building. Most feel that the investigation is a pressure campaign by the Trump administration related to the difference of opinion regarding the pace of interest rate cuts by the fed. Powell’s term ends in May.
Now for valuation calculations – starting with cryptos...Here’s a look at where they stand.
- Bitcoin: +2% in 2026
- Ether: +4% in 2026
- BitwiseETF (Top 10 cryptos): +>1% in 2026
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. That reversed a bit last week with cryptos joining in the risk on rally that took place.
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: 31.45
- Historic Avg. P/E: 16.19
Translation: On earnings alone, the maximum downside risk is a 49% drop from here—slightly higher than a week ago as stock 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 49% 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.