Persistent Negative Correlation With the Nasdaq Hints Bitcoin Could Be Near a Floor

Historical patterns indicate that bitcoin often establishes a bottom when its correlation with the Nasdaq 100 breaks down—a scenario now unfolding for the fourth time in five years.

The cryptocurrency is once again decoupling from traditional risk assets, and the latest divergence may be signaling a pivotal shift. Periods in which bitcoin’s relationship with the Nasdaq 100 turns negative have frequently coincided with significant market lows, and the current setup closely resembles past turning points.

The 20-day correlation coefficient between bitcoin and the Nasdaq 100 has fallen to -0.43, marking the fourth negative reading since 2020. Comparable episodes in mid-2021 and August 2024 preceded meaningful recoveries. While bitcoin is often viewed as a high-beta proxy for the tech sector—tending to outperform in risk-on environments and lag in risk-off conditions—its present decoupling is particularly notable.

Bitcoin has slid as much as 36% from its October all-time high. The Nasdaq 100, meanwhile, has experienced a comparatively modest pullback, with a maximum drawdown of 8% and the index now sitting just 2% below its peak. Bitcoin remains 27% off its high, underscoring the disparity.

Past instances of negative correlation have emerged during periods of market stress. The most recent came during the unwinding of the yen carry trade, pushing bitcoin toward $49,000—a level that ultimately marked a local bottom. Another occurred in September 2023, when bitcoin traded just under $30,000 before rallying to $40,000 by year-end. The earliest episode appeared in May 2021 amid China’s mining crackdown, which saw bitcoin fall from $60,000 to $30,000 before rebounding to new highs later that year.

These recurring episodes highlight that negative correlation between bitcoin and the Nasdaq 100 often surfaces near major inflection points. While today’s environment suggests another bottom may be developing, the timing and magnitude of any recovery remain uncertain.