BofA Warns of $1 Billion Bitcoin Liquidation Risk Amid S&P 500 Overvaluation

Bank of America (BofA) has issued a structural warning regarding overextended market valuations, highlighting significant risks for both equity and crypto investors. According to the bank, the S&P 500 is currently statistically expensive, trading at elevated levels across 18 of 20 key valuation metrics. This environment poses a severe threat to Bitcoin bulls, who could potentially face a $1 billion liquidation trap if market sentiment shifts. Analysts expect market multiples to undergo compression in the near term, even if corporate earnings continue to show growth. The warning suggests that a broader risk-off move in traditional equities could trigger a deleveraging event in the digital asset space. Consequently, investors are advised to remain cautious as the potential for a cascade of forced liquidations remains high.