Column 489      January 10, 2025Bitcoin vs S&P 500

More than three years ago, December 3, 2021, I posted a commentary titled “The Modern-Day Pet Rock.” It was an analysis of Bitcoin and all digital currencies that concluded they should all be sold because they were basically like pet rocks. On that day Bitcoin closed at $53,474.05. It was down from its November 10, 2021, momentary peak of $59,000.00. One year later, November 21, 2022, it touched $15,479.00 down 73.8% from its high.1

Today Bitcoin is $93,600 just off its peak of $108,364 set on December 17, 2024. This is now a second chance to sell it before it melts to nothing. There are several reasons why, but one that most analysts don’t seem to realize is that prices for cryptocurrencies are motivated by the same gambling hysteria as the masses have for meme stocks!

Look at the chart showing both the S&P 500 (red) and Bitcoin (green). Notice how for decades their prices have cycled mostly together. For the same reason they were both a sell at the end of 2021, they are a sell today. The S&P 500 was grossly overvalued the end of 2021 and due for a correction. As it corrected and speculative juices subsided—Bitcoin crashed.

Today, all aspects of the stock market are more overpriced in nearly every measure in all of time. Therefore, if the markets for virtually everything were radically overpriced at the end of 2021 followed by Bitcoin dropping like a stone, the joint recoveries to all-time highs, fueled by a speculative mania and record government deficits, the stage is set for an even more devastating crash than before!

Yes, all market sectors are expecting even higher prices ahead with Trump’s inauguration. Instead of that being good for higher prices, it’s that kind of widespread euphoria that makes market tops. On the other hand we know Trump has promised to rein in spending and trim down the size of government. Therefore, the odds for a crash in speculative sentiment are quite high. If so, the highly leveraged markets are poised to unwind the speculative fever that paid up for trash. That reversal in sentiment will smash all stocks and Bitcoin.

Following the bottom for stocks and Bitcoin in 2022, Bitcoin soared from $15,479.00 to $108,316 as part of the larger mania for financial assets. The feeding frenzy for Bitcoin made its peak one day after the top in the NASDAQ 100 index on December 16, 2024. But Bitcoin has nothing backing it. It’s redeemable for nothing except for a greater fool to give up dollars to buy it.

Keep in mind that Bitcoin’s value comes from the same speculative belief system that has recently pushed up the price of a meme crypto known as Fartcoin to where its market capitalization soared from zero to $1.37 billion. So, even though many investors say the dollar has no backing either, just like Bitcoin, what they don’t understand is that a lot of the world’s debts are payable in dollars! If a recession were to start and the credit system starts to contract, the quantity of marketable assets that must be liquidated to cover dollar-denominated loans will be beyond impressive.2 3 4

During a deflation investors will be forced to evaluate their holdings. Think about the long-term comparison of owning Apple compared to a Bitcoin, Fartcoin, or a new company that has no assets or business prospects? If you must sell something for dollars in order to pay off dollar-denominated debts, which would you sell first and which would you sell last? Would it be something tangible or something imaginary?

For certain, higher prices for Crypto are based only on finding a greater fool to buy it with dollars. In my book holding on to an old car that’s paid for is better than owning any Crypto. That’s because a car is real and actually a necessary asset for most people just like food.

I strongly suggest that everyone read “The Modern-Day Pet Rock.”

To your health.

Ted Slanker

Ted Slanker has been reporting on the fundamentals of nutritional research in publications, television and radio appearances, and at conferences since 1999. He condenses complex studies into the basics required for health and well-being. His eBook, The Real Diet of Man, is available online.

For additional reading:

1. The Modern-Day Pet Rock by Ted Slanker

2. Intrinsic Value Of Crypto: What Is It & How To Calculate It by Onkar Singh from CoinTelegraph.com

3. Bitcoin FUD: 6 Common Arguments From BTC Skeptics During Bull Markets by Aaron Wood from CoinTelegraph.com

4. Behold The Era Of Fartcoin’s Majesty by Quoth the Raven
Every single thing the human race has ever done in the history of economics and finance has led us to Fartcoin. We're beyond fuxxed.