Grantham Warns of 70% US Equity Crash, Still Thinks Bitcoin Is Going to Zero 😬

GMO co-founder Jeremy Grantham warned on CNBC that an AI-driven bubble has pushed US stocks to the most expensive levels in American history and could set up a decline of as much as 70%. The veteran strategist urged investors to step away from US equities and look abroad toward non-US stocks, bonds, and precious metals. Grantham said the market's price-to-earnings ratio has averaged more than 60% higher since 2010 than over the prior century, tying that premium to years of cheap money. He acknowledged AI is transformative but argued that near-universal faith in the technology has fueled dangerous overinvestment. His bubble model holds that every prior speculative extreme eventually reverts to trend, and a retreat toward those norms, he said, points to a drop closer to 70% than 50% in the biggest winners. The timing, he conceded, could land anywhere from two weeks to two years.

Grantham called the dot-com peak in 2000 and warned of a US housing bubble in 2007, though his 2021 epic-bubble warning proved early as stocks climbed before stumbling in 2022. Investor Ray Dalio has separately flagged similar liquidity risks. Even with that mixed record, Grantham's history carries weight across Wall Street. Bulls counter that today's AI leaders earn real profits, unlike many dot-com-era firms, and Federal Reserve Chair Jerome Powell has called AI spending real economic activity. "I won't go into particular names, but they actually have earnings… These companies actually have business models and profits and that kind of thing. So it's really a different thing [from the dot-com era]," Powell said. Grantham himself dismisses crypto, repeating his view that the token is worthless and headed toward zero.

A 70% unwind would not stay contained inside the stock market, and crypto market participants are watching closely. Bitcoin ($BTC) now trades with a high correlation to US equities, leaving it exposed to a deep risk-off move. The strain already shows in the data: US spot Bitcoin ETFs posted a record 30-day outflow of $6.35 billion through mid-June, according to Galaxy Research, with Bitcoin trading near $59,663 during the pullback. Whether Grantham proves early or right this time, his track record means few are dismissing the warning outright, and the coming round of AI earnings will test how much of the optimism is justified.