In-depth analysis: Why does U.S. stocks continue to rise while Bitcoin falls?

Recently, there has been a divergence between the trends of BTC and the Nasdaq index of the US stock market. The Nasdaq keeps hitting new highs while BTC falls and drives the overall crypto market to fall significantly. This is inconsistent with the traditional impression that the Nasdaq has a positive correlation with BTC. So what is behind this What's the logic? Have similar situations occurred in history? This article will try to explore the strength and changes of the correlation between the two in different time dimensions by reviewing the current and last bull markets.

In fact, BTC and US stocks do not always 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 bull market, we can find several patterns:

1 , the initial starting point and the final end point of the two rises are completely consistent in terms of time latitude

2. The rising process of the two is different

The Nasdaq rises at a relatively stable speed, showing a straight line with an approximate fixed slope from the K-line.

BTC is different. The rising process is closer to exponential growth. The initial rising rate is slow, and then it rises rapidly after a certain point in time. Coincidentally, this "turning point" of accelerated rise corresponds to the Nasdaq Index in time. The first pullback in the uptrend holds.

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

Which stage in history does the current market position correspond to?

The market is going through Is there any trace of the rise and fall of BTC in US stocks?

It can be found that during most of the two 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 is the subsequent market trend? 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 bull market, the divergence between the two lasted not long, and the week The online view lasts for about 9 weeks, and then returns to a positive correlation (weekly level).

2. In the last bull market, the time when the two recovered 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.

How to logically understand this special common trend that occurred in both bull markets

Whether it is BTC, gold, or US stocks, the macro environment is the same, and prices are affected by financial liquidity, risk-free asset yields, etc. Due to the constraints of factors, BTC, as a more flexible asset type, can rise strongly in the early stages of the bull market and significantly outperform the US stock market. However, things will turn against each other and there is no permanent strength. After the main rise, it will be weaker than the US stock market. This is consistent with the situation. The relationship between altcoins and BTC is similar.

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.

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