The correlation between Bitcoin's value and the Nasdaq index has reached record levels, potentially indicating an upcoming divergence in their metrics.
Current Bitcoin and Nasdaq Correlation
According to Singapore-based firm Matrixport, the correlation between Bitcoin and Nasdaq has reached a level only achieved twice before, followed by a 20% drop in Bitcoin price.
Matrixport Analysis
In a recent post, Matrixport highlighted that the correlation is due to factors such as the recent repricing of earnings expectations ahead of the first quarter earnings season and ongoing global economic uncertainty. As stated by Matrixport: “This correlation reflects the recent repricing of earnings expectations amid ongoing economic conditions and tariff discussions. As a result, Bitcoin is trading in line with the tech sector.”
Outlook and Forecasts
Despite the current trends, Matrixport warns that such high correlations have historically been short-lived, suggesting that a divergence in performance may be on the horizon. The last two times this correlation level was reached, Bitcoin's price dropped by more than 20%. While spot Bitcoin ETFs returned to weekly inflows, stabilizing above the crucial $85,000 support level, which analysts deem necessary for further growth. According to 10x Research, Bitcoin reversal indicators have turned bullish.
The current situation with Bitcoin and Nasdaq correlation suggests a possible imminent divergence in their price dynamics, although exact timing and confidence in this are yet to be determined.
