A quick look at the close correlation between the Nasdaq and Bitcoin. What’s next for the risk trade?

It has been widely discussed that Bitcoin has a close correlation to the Nasdaq. At this stage of its market acceptance, BTC is viewed by many institutions as a risk on asset and they trade it accordingly. Although, it is not a perfect correlation, there is some merit to these two assets trading in close correlation to one another. Below are my bullish counts for the Nasdaq and BTC. I DO HAVE BEARISH COUNTS FOR BOTH THAT POINT TO LOWER LOWS AHEAD, AFTER AN IMMEDIATE TERM BOUNCE. However, for now I favor the bullish case, which makes the large presumption that the thus far late to the game Fed capitulates on its tightening plan. I’ll reconsider in the coming weeks after we see the coming bounce and subsequent pullback. Let’s look at NDQ and BTC since the Covid correction and the March 2020 lows. As you can see, both have traced out perfect parallel channels. And while BTC has already witnessed a 61.8% retracement, NDQ has corrected 50% of the post Covid low rally (compared to the SPX 38.2% correction) as the risk off trade has been prominent amongst institutions. Should these lower channels hold as I suspect they will, for the immediate term at least, then we should see fairly modest bounces at the very least for both NDQ and BTC.

About alphahorn

I received an MBA from Columbia University’s Graduate School of Business in New York and am a Wall Street veteran. I’ve worked for a number of investment banks including Smith Barney and First Boston/C S First Boston in New York. Over the years, I have developed my own Proprietary Swing System and I combine that System with my own Elliott Wave Analysis to trade.
This entry was posted in Uncategorized and tagged , , , , , , , , , , , , , . Bookmark the permalink.

Leave a Reply