Bank of America issues warning: US stocks and crypto are forming a bubble
1min read Michael Hartnett of Bank of America said the strong rebound in US stocks and cryptocurrencies has made the asset classes look frothy. The S&P 500's price-to-book ratio soared to 5.3 times in 2024, near the peak of 5.5 times reached in March 2000 during the tech bubble, according to data compiled by Bloomberg.Hartnett said the risk of "overshooting" in early 2025 was high if the S&P 500 approached 6,666, or about 10 per cent above current levels. The bank's bull and bear indicators have yet to show signs of global investors' prosperity.The strategist, who was bearish on stocks in 2023, has become more neutral this year.The S&P 500 surged about 27 per cent in 2024, its best performance since 2019, as optimism about artificial intelligence and bets on Donald Trump's "America first" policies to boost domestic markets helped. His support for cryptocurrencies also helped push bitcoin above $100,000 this week.Bitcoin's market capitalisation is more than $2tn, equivalent to the world's 11th-largest economy, Hartnett said.