Bitcoin, the Stock Market: Risk on the Horizon

Bitcoin correlations report, August 2024

As we discussed on Monday's edition of the newsletter Bitcoin is currently in a neutral market regime but one that's significantly bent towards the bearish side. 

In particular that means weakness in broader category of risk assets could be a sign that things are heading in the wrong direction for BTC in the short term.

Which is why in today's Bitcoin correlations report we focus on Bitcoin and its relationship to the NASDAQ.

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Bitcoin, the Stock Market: Risk on the Horizon

The Takeaway

Bitcoin is currently undervalued relative to the NASDAQ, trading well below expected levels.

NASDAQ momentum strongly correlates with Bitcoin performance, with positive NASDAQ trends typically benefiting Bitcoin. However, the NASDAQ's exceptional 10-year run raises concerns about potential mean reversion, which could negatively impact Bitcoin. 

While long term fundamentals remain intact, current market conditions suggest caution. Investors should consider reducing leveraged positions and closely monitor for signs of a bearish shift, preparing for potential volatility if the NASDAQ experiences a correction or slower growth.

Bitcoin is Undervalued