The US stock market is so overvalued that it could collapse like the dot-com bubble of 2000. This is suggested by dividing the U.S. stock market capitalization by M2 money supply.
This indicator, which reflects the degree to which available funds are invested in the stock market, reached a level of 3.06. This is a new historic high, surpassing the 2000 peak of 3.03.
Only on these two occasions did this metric exceed a value of 3. Money supply tripled. In other words, this reflects excess money in the economy flowing into the market.
Levels seen over 20 years ago preceded crash Technology behind the so-called “dot-com bubble”. It consisted of strong demand for internet-related stocks in the late 90s, a product of financial expansion and financial speculation. This experienced a sharp decline between 2000 and 2002, with many companies going bankrupt.
Moreover, in 2007 and 2021 this indicator did not exceed 3 points, but reached a high level of more than 2 points. This continues with a bear market in the equity sector and is now a cautionary scenario.
“This does not mean a decline is imminent, but it could mean that the market needs confidence and perfect data to continue rising,” said expert Catalina Castro.
In parallel, various analysts are predicting a recession that will disrupt the stock market. meanwhile, S&P 500 (SPX) hits new all-time high This week it is $6,985 (USD).
The movement of this index, which aggregates 500 stocks of U.S.-listed companies, differs from that of Bitcoin (BTC) and other cryptocurrencies. As reported by CriptoNoticias, these last assets have been experiencing a period of adjustment since the fourth quarter of last year.
(Tag Translation) Analysis and Research
