The 2025 US stock market performance can be described as a rising tide, with the S&P 500 frequently hitting new highs, and many investors immersed in the joy of gains. However, behind this wave of growth, there are hidden risk signals that are being overlooked.

Federal Reserve Chair Jerome Powell's recent comment sparked market reflection—"Stock prices are already quite overvalued." This is not just casual talk but a clear warning from the decision-maker steering the global financial system.

Data speaks for itself. The Shiller Price-to-Earnings ratio has now soared to 40.74. How crazy is this number? Compared to the peak of 44.19 during the internet bubble era, we are already quite close. Looking back at historical records, whenever the Shiller P/E exceeds 30, unusual circumstances tend to follow. In the past 155 years, this has happened only 6 times, and in each of the first 5 instances, it ended in a bear market with declines ranging from 20% to 89%.

Will this time be different? It's hard to say. High valuation environments indeed influence policy considerations. While the Fed cannot directly intervene in the stock market, tightening financial conditions often put pressure on overvalued assets. History shows that when the market collectively ignores such warnings, adjustments tend to be sudden.

However, from another perspective, the average bull market cycle is close to 3 years, much longer than bear markets. After each correction, the market is reshaping itself. Even a 20% pullback usually takes just over 9 months to digest.

For crypto asset allocation, this might be an opportune moment for reflection. During periods of macro risks accumulation, considering increased holdings of risk-averse assets like Bitcoin may provide some balance amid market volatility. The key is to understand your risk tolerance—whether you can endure until the next recovery, which determines the effectiveness of your strategy.

Will 2026 become a turning point? The market is already giving clues.