Exploring the Divergence Phenomenon Between BTC and Nasdaq Index

Recently, a striking phenomenon has emerged in the market: Bitcoin ( BTC ) is showing a divergence from the Nasdaq index ( Nasdaq ). While the Nasdaq keeps reaching new highs, BTC is experiencing a downward trend, dragging the entire cryptocurrency market down significantly. This contradicts the common perception that BTC and the Nasdaq are positively correlated. So, what is the logic behind this divergence? Has there been a similar situation in history? This article will attempt to explore the changes in correlation between the two over different time dimensions by reviewing this bull market and the previous one.

In fact, BTC and the US stock market do not always maintain a fixed coefficient positive correlation; rather, they exhibit varying degrees of correlation at different cyclical stages. By comparing and analyzing the previous bull market and this bull market, we can identify the following patterns:

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

2. There are differences in the process of the two rising:

   • The Nasdaq is rising at a relatively stable rate, presenting a nearly fixed slope line on the candlestick chart.
   • The process of BTC's rise is closer to exponential growth, with a slower initial rate of increase, followed by a rapid surge after a certain point in time. Interestingly, this "turning point" for accelerated growth often corresponds to the first stabilization after a pullback during the upward phase of the Nasdaq.

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

So, which stage in history corresponds to the current position of the market? Is there a pattern to the current situation where the US stock market is rising while BTC is falling?

Analysis shows that during most of the two bull markets, BTC has maintained a positive correlation with U.S. stocks, although there have been phases of negative correlation, they were not dominant. In the last bull market, after BTC peaked for the first time, the Nasdaq continued to rise while BTC corrected, leading to a divergence in their trends. This is very similar to the current market situation, and history seems to be repeating itself in the same place.

So, how long will the divergence between BTC and the Nasdaq continue? How will the divergence recover? From the perspective of time and intensity:

1. In the last bull market, the duration of divergence between the two was relatively short, approximately 9 weeks on the weekly chart, after which it returned to a positive correlation.

2. In the last bull market, the time point when the two regained positive correlation was when the BTC daily chart showed a significant weakening of downward momentum and reached an important support level.

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

Whether it is BTC, gold, or US stocks, they are all influenced by similar macroeconomic environments, with prices constrained by factors such as financial liquidity and risk-free asset yields. As a more elastic asset class, BTC can strongly rally in the early stages of a bull market, significantly outperforming US stocks. However, extremes will eventually reverse; there is no perpetual strength. After a major rise, BTC may again underperform US stocks, which is akin to the relationship between altcoins and BTC.

From another perspective, during the main ascending phase, the market liquidity is sufficient to support an overall rise in asset prices. However, after rising to a certain extent, the upward momentum may become exhausted, making it difficult to sustain a collective rise across all categories of assets, leading to a situation where some assets rise while others fall.

From the perspective of event factors, the market has recently been influenced by the German government's policies and the selling pressure from some large holders. Regardless of how this trend is interpreted, BTC will ultimately restore its positive correlation with the U.S. stock market after sufficient adjustment.