I remember since I got into Bitcoin I could feel there was a correlation with the Nasdaq, although I wasn’t completely sure. However, BTC was in the up-only mode so I didn’t have a reason to investigate further.
After a few years, more and more people started to notice the correlation. Not a bad thing for BTC, which is a technological product itself therefore it’s understandable its life cycles could rhyme with a tech index.
However, by digging deeper through the charts it became evident to me that Btc is the majority of the time correlated with the Nasdaq on its way up, while is not always correlated on the downside.
If we look at the beginning of its ascending phase in March 2017, we can see that it is correlated on the way up, in fact, Btc and Nasdaq rose simultaneously:
We can find the same correlation on the upside if we look at the July 2013 bull run, both go up starting at the same time:
However, both at November 2013 and December 2017 Btc peaks what happened for the following months was that after the peak the correlation broke down, i.e. the Nasdaq kept going up while btc started to crash. (You can clearly see that on the two charts above)
Well, if we compare the Nov 2021 Btc peak with the Nasdaq one,what we can see is that both the Nasdaq and the Btc crashed in sync.
That pattern has never happened at any Bitcoin peak, historically speaking.
Was the 2021 value of 68K per BTC the top?
Probably not, because the actual top will happen when the BTC/Nasdaq correlation breaks down. We are going to name the next peak to be “the top” IF the BTC starts to crash while the Nasdaq keeps rising, this meaning that the BTC cycle has exhausted its power coming from the halving and cannot keep up with the Nasdaq’s rise anymore.
Once the correlation breaks we’ll see the Nasdaq still rising and Bitcoin crashing, that’s what we can call to be the top for BTC.
As a consequence, this means the BTC hasn’t peaked yet and the cycle is not over, given that Btc at 68k hasn’t been high enough to break the historical correlation.
24k BTC is still gold
Francesco M., CEO @ heliosfund.io