I recently read an analysis in the Financial Times about the current valuation of the U.S. stock market, and there are some points worth paying attention to.

As of the end of April, the trailing P/E ratio of the S&P 500 has risen to around 24, which is 50% higher than the historical average of 16. This number alone is alarming, but even more outrageous is that the cyclically adjusted P/E ratio (Shiller ratio) has exceeded 37—meaning the valuation level of the U.S. stock market is now the second highest in history, only behind the dot-com bubble era.

Think about what this implies. The current rebound in the U.S. stock market is entirely built on a set of optimistic assumptions: AI will continue to drive profit growth, inflation will steadily decline to the Federal Reserve’s 2% target, interest rates will keep falling, and geopolitical risks will remain manageable. These conditions must all be met simultaneously for the market to sustain its current high levels.

The problem is that these assumptions are interdependent. Once any one of them deviates—such as the Fed suddenly turning hawkish, oil prices surging and causing inflation to rebound, geopolitical tensions escalating unexpectedly, or AI-driven profit growth not being as strong as expected—the market will face a significant shock. When prices are set for perfection, any imperfection can trigger disproportionate corrections. That’s why the error margin in the U.S. stock market is almost zero.

For those of us involved in crypto, this warning is particularly relevant. Bitcoin and other digital assets have shown a strong positive correlation with the U.S. stock market during this cycle. If the risks highlighted by the Financial Times actually trigger a reevaluation of stocks, the crypto market will also come under pressure. Currently, Bitcoin is stuck in the 79,000–80,000 range, liquidity is decreasing, and there are ongoing short positions in derivatives. Once the stock market begins to adjust, these pressures will be released simultaneously.

In plain terms, the high valuation of the U.S. stock market and the fragility of the crypto market are interconnected. When the supporting optimistic assumptions can no longer hold, both markets may decline together. This is not alarmism but a structural risk.