U.S. Market at Historic Valuation Surpassing Dot-Com & Great Depression Valuations — Bitcoin (BTC) Next?
- U.S. stock valuations surpass dot-com and Great Depression peaks, heightening risks of market correction.
- Bitcoin drops 2.8% to $111.5K as heavy derivatives trading drives volatility amid equity market strain.
The U.S. equity market has reached its highest valuation levels in more than a century, according to Bloomberg data, raising comparisons with previous financial peaks that preceded severe corrections. Analysts tracking multiple valuation indicators confirm that current levels now exceed those seen during the dot-com bubble of 1999 and the market run-up to the Great Depression in 1929.
The assessment draws on several valuation measures, including trailing and forward price-to-earnings ratios, the cyclically adjusted price-to-earnings ratio (CAPE), price-to-book, price-to-sales, enterprise value-to-EBITDA, the Q ratio, and market capitalization-to-GDP. The average percentile across these indicators as of August 25 shows the highest reading in recorded history.
Historical comparisons show the scale of the surge. Similar extremes occurred in 1929 before the Great Depression, in 1965 ahead of a prolonged stagnation phase, and in 1999 at the height of the dot-com boom. Each period was followed by significant declines, displaying how unusual the current valuations are in context.
S&P 500 Long-Term Perspective
The S&P 500 index, charted on a logarithmic scale, shows steady growth through decades of market cycles, including downturns and recoveries. Declines after previous valuation peaks, such as the dot-com crash in the early 2000s and the 2008 global financial crisis, eventually gave way to record highs in subsequent years.
While the index continues to advance in 2025, the valuation setting has amplified questions about the sustainability of gains. Analysts note that elevated multiples do not guarantee an immediate downturn, but they increase sensitivity to changes in growth, interest rates, or earnings expectations.
Bitcoin Moves Alongside Risk Sentiment
Bitcoin mirrored the risk-off sentiment on August 25, falling from weekend highs. The cryptocurrency declined 2.83% in 24 hours, dropping to $111,524.27 after briefly trading above $114,750 the previous day. The move coincided with late-session selling pressure that extended into the morning of August 25, keeping the asset below $113,000.
Data from CoinMarketCap shows that Bitcoin’s market capitalization now stands at $2.22 trillion, with its fully diluted valuation at $2.34 trillion. The 24-hour trading volume surged to $80.27 billion, a 51.85% increase compared to the previous day, reflecting heavy trading activity and heightened volatility.
Supply, Liquidity, and Trading Patterns
Bitcoin’s circulating supply remains close to its maximum, with 19.91 million BTC issued out of the capped 21 million total. Despite this scarcity dynamic, broader market sentiment and macroeconomic uncertainty appear to be dominating short-term price direction.
The volume-to-market capitalization ratio reached 3.6%, a level which indicates aggressive derivatives trading and possible liquidation events. Analysts highlight that derivatives-driven volatility may be playing a central role in recent swings.
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