BTC and Nasdaq Divergence: Historical Reenactment or New Trend?

Recently, Bitcoin ( BTC ) has shown a significant divergence from the Nasdaq index. While the Nasdaq continues to hit new highs, BTC has been on a downward trend, dragging the entire cryptocurrency market down sharply. This contradicts the traditional perception that the two are positively correlated. So, what is the logic behind this divergence? Has there been a similar situation in history? This article will explore the changes in correlation between the two over different time dimensions by reviewing the current and previous bull markets.

In fact, BTC and the US stock market do not always maintain a fixed coefficient positive correlation, but show varying degrees of correlation at different cyclical stages. Looking back at the last and this bull market, several patterns can be observed:

1. The starting and ending points of the two rises are highly consistent in the time dimension.

2. The upward processes are quite different. The Nasdaq's rise is relatively stable, with the candlestick chart showing an almost fixed slope line. In contrast, BTC's rise is more akin to exponential growth, initially increasing slowly, and then suddenly accelerating after a certain point in time. Interestingly, this "turning point" of accelerated growth often corresponds to the first pullback stabilization phase of the Nasdaq's rise.

3. The first peak of BTC usually corresponds to the second pullback small platform during the rising phase of the Nasdaq.

So, which stage in history does the current position of the market correspond to? Can we find answers by tracing the situation where the US stock market is rising while BTC is falling?

Throughout the two bull markets, BTC and U.S. stocks have maintained a positive correlation for most of the time, although there have been phases of negative correlation, which are not dominant. In the last bull market, after BTC peaked for the first time, the Nasdaq continued to rise while BTC pulled back, showing a divergence in their movements. This is quite similar to the current market situation, as if history is repeating itself at the same junction.

So, how long will the divergence between BTC and the Nasdaq continue? How can synchronization be restored? Analyzing from both time and strength aspects:

1. During the last bull market, the divergence between the two did not last long, and the weekly level returned to a positive correlation after about 9 weeks.

2. In the last bull market, the point at which the two regained their positive correlation appeared when the BTC daily chart clearly showed a weakening of the downward momentum and reached an important support level.

If measured by historical standards, the current market does not seem to have fully met the conditions for divergence recovery and needs to wait for more K-line information. From a logical perspective, this special common trend that appeared during the two bull markets may stem from the following reasons:

The prices of assets such as BTC, gold, and US stocks are constrained by factors like financial liquidity and the yield of risk-free assets. As a more elastic asset, BTC can surge strongly during the early stages of a bull market, significantly outperforming US stocks. However, extremes cannot last forever; after a major rise, BTC may underperform US stocks, which is similar to the relationship between altcoins and BTC.

Looking from another angle, during the main rising phase, the market liquidity is sufficient to support the overall rise in asset prices. However, after the prices rise to a certain extent, the upward momentum is exhausted, making it difficult to sustain a collective rise in all asset categories, and there may be a situation where some assets rise while others fall.

Recently, the market has also been affected by some event-driven factors. Regardless of how this trend is interpreted, after sufficient adjustment, BTC is likely to resume its positive correlation with the U.S. stock market. Investors should closely monitor market changes and seize investment opportunities wisely.