Beware - US stocks trade at ‘Dotcom’ bubble values

Although things have been going relatively well for Bitcoin over the last few months and it seems as though we can be hopeful again, red warning lights are flashing for US stock markets. They are trading at the same profit ratio as we last saw in 1999, a few months before the Dotcom bubble burst.

Bitcoin is very cheap in comparison, but note that even the largest digital currency could crash in the event of an AI bubble collapse. In that case, support levels could be found around $35,000 as the possible lowest point.

Dotcom

It has been a while, but just as the ‘AI hope’ is currently prevailing among tech companies, in 1999 there was hope that ‘the internet’ would solve everything.

That resulted in earnings ratios for some stocks soaring far above everything else (a bit like Nvidia and OpenAI are now being valued). After investors realized how far removed their expectations were from reality, the stock market collapsed like a house of cards. The S&P 500 and the Nasdaq both corrected by about 50%, and it took until 2007 before 1999 values were reached again.

Not long after that, in 2008, things went down again.

Cheap

Compared to some tech stocks, Bitcoin is still trading very cheaply. While Bitcoin set an all-time high of 126,000 in October last year, the coin cooled down significantly afterwards and is currently trading well below that level.

The S&P 500 and the Nasdaq have risen since October last year and are therefore much more in ‘bubble’ territory than Bitcoin is.