Shiller Ratio Hits Near-Record High, Bitcoin's Valuation at Risk

The S&P 500's Shiller CAPE ratio has reached near-record levels, hovering between 40 to 42. This is close to its all-time high of around 44 set during the late-1990s dot-com bubble.

This reading indicates that equity valuations are in rare territory, and Bitcoin holders should take notice.

The CAPE ratio measures an index by dividing it by the ten-year average of inflation-adjusted earnings. Nobel laureate Robert Shiller developed this method to smooth out short-term distortions and provide a longer view than conventional multiples.

History shows that when the CAPE ratio remained above 30 for sustained periods, subsequent 10-year real returns for US equities were modest or negative.