Navigating the Volatility: How Low Could Stocks and Crypto Go?

The article explores the current volatility in stock and cryptocurrency markets as of late April 2025. It highlights the performance of major US indexes, discusses ongoing economic pressures, and the surprising resilience in technology earnings growth. Additionally, it covers the traction Bitcoin and other cryptocurrencies have gained as a hedge against the dollar’s weakness. Financial strategies and the importance of avoiding emotional trading are also emphasised.

How Low Can Stocks & Crypto Go? The question’s buzzing as markets hit some volatility. After a rocky period, which may feel more like doomscrolling for investors, it’s crucial to keep your head clear. This week offers a glimpse into the potential worst-case scenarios for stocks and crypto. Yet, by preparing for these scenarios, you can manage through tough market times like we’re witnessing now, rather than panicking with a racing heart.

Historically, the US stock market has been a powerhouse for wealth creation. Meanwhile, cryptocurrency has transformed many early believers into millionaires. Research indicates that over 90% of investors attempting to time the market end up worse off compared to sticking with their initial investments. Avoiding the timing trap is essential for long-term success.

Current stats show how the major US indexes are performing in 2025: The Dow is down 5%, though it rebounded by 4% last week. S&P 500 down 6% but saw a 6% rise last week, while the Nasdaq suffered a 10% dip yet recovered by 8%. What a week it was, really – stocks had one of their strongest showings in years just last week.

The backdrop remains fraught with issues including trade war tensions and Federal Reserve policy battles. But a sliver of hope appears as chatter grows about President Trump rolling out significant trade deals in the coming weeks, potentially even with China. Yet, caution remains key. While optimism’s back, no guarantees exist that underlying issues have truly resolved.

When major indexes dip into bear market territory — generally a 20% drop from peak values — history shows they often bounce back. Investors should note every major bear market in the US has historically provided great buying opportunities.

This week holds particular significance for technology earnings. As of now, around 36% of companies have released their earnings reports. Surprisingly, the average earnings growth is about 10.1% year-on-year, surpassing the expected 7.2%. This positive trend is another factor fueling optimism on Wall Street.

Flip over to cryptocurrencies: This past week was quite promising for them. More investors are turning to digital currencies like Bitcoin as a safeguard against the weakening US Dollar. For many proponents, Bitcoin is seen as “digital gold”. Currently, Bitcoin’s up 10%, though it’s -1% YTD, while Ether increased by 6% last week but is down 47% YTD. The BitwiseETF tracking the top ten cryptos gained 13% last week, but it remains down 12% YTD.

Examining stocks gives a clearer picture: The S&P 500’s current P/E ratio sits at 27.54, higher than its historical average of 16.14. This translates to a potential downside risk of a striking 41% drop from here. Prices have surged faster than fundamentals, raising concerns about overvaluation, although there’s been a 7% uptick in market fundamentals during this correction phase.

So, what’s the best course of action? If a 41% drop won’t send you scrambling, that’s a good sign. If it would, though, now’s the time to consult a financial professional to create a robust plan to ensure you remain secure amidst these tumultuous markets. Remember, in the world of investing, emotions can lead to losses. Stay level-headed.