A deeper dive into the relationship between BTC and the Nasdaq: How long will the divergence last?

Recently, there has been a divergence between the trends of BTC and the Nasdaq. The Nasdaq keeps hitting new highs while BTC goes down and drives the overall crypto market to fall significantly. This is inconsistent with the traditional impression that the Nasdaq and BTC are positively correlated. So what is the logic behind this? History Has a similar situation occurred on the Internet? This article will try to explore the strength and changes in the correlation between the two in different time dimensions through a review of this and the last bull market.

In fact, BTC and US stocks do not have a positive correlation with a fixed coefficient, but have different degrees of correlation at different stages of the cycle. Looking back at the last bull market and this current bull market, we can find several rules:

1. The initial starting point and final end point of the two risings are completely consistent in terms of time latitude

2. The processes of the two risings are different

The Nasdaq rises The speed is relatively stable.

BTC is different from the straight line showing an approximate fixed slope from the K-line. The rising process is closer to exponential growth. The initial rising rate is slow, and after a certain point in time, there is a rapid rise. Coincidence What is interesting is that this "turning point" of accelerated rise corresponds to the Nasdaq's first correction in its rising phase.

3. At the same time, the first peak of BTC corresponds to the second small correction platform in the rising stage of the Nasdaq

So which stage in history does the current market position correspond to? What stage is the market currently experiencing? Is there any trace of the rise in US stocks and the fall in BTC?

It can be found that during most of the two rounds of bull markets, BTC and US stocks maintained a positive correlation. Negative correlation stages occurred but were not dominant. In the last bull market, after BTC peaked for the first time, the Nasdaq continued to rise, but BTC pulled back, and the trends of the two diverged (the yellow box in the figure below). This is similar to the current situation of the market, and history has Repeated again in the same place.

What will be the subsequent market direction? How long will the divergence between BTC and the Nasdaq continue? How will the divergence be responded to? From two aspects: time and intensity:

1. In the last round of bull market, the divergence between the two lasted for a short time. On a weekly basis, it lasted about 9 weeks, and then returned to a positive correlation (weekly level). ).

2. In the last bull market, the time when the two regained their positive correlation was when the BTC daily level showed obvious decline in strength and reached an important support position.

If measured by historical standards, it can be seen that the current market has not fully met the conditions for divergence recovery and needs to wait for more K-line information. So how to logically understand this special common trend that appeared in both bull markets.

Whether it is BTC, gold, or US stocks, the macro environment is the same. Prices are restricted by financial liquidity, risk-free asset rate of return and other factors. BTC, as a more elastic asset type, can be strong in the early stages of the bull market. After the main rise, it significantly outperformed the U.S. stock market, but things must reverse at the extremes. There is no permanent strength. After the main rise, it became weaker than the U.S. stock market. This is similar to the relationship between altcoins and BTC.

Looking at it from another perspective, during the main rise stage, market liquidity is sufficient to support the overall rise in asset prices. However, after rising to a certain level, the fuel or motivation for the rise is exhausted and it is difficult to support the collective rise of all categories of assets. Over time, there may be a situation where one goes up and the other goes down.

From the perspective of event factors, the market has recently been affected by selling pressure from the German government and Mentougou. No matter how you interpret this trend, BTC will eventually return to a positive correlation with US stocks after the adjustment is fully in place. (The above are the author’s personal opinions for reference only)

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