Bitcoin BTC$92,559.67 is once again behaving differently from the traditional risk asset complex, and the latest divergence may be sending an important signal.
Negative correlation between bitcoin and the Nasdaq 100 has often aligned with market bottoms for bitcoin, and the current setup looks similar to several past turning points.

This is now the fourth time in the past five years that the two assets have moved into negative territory on a 20 day correlation coefficient, which currently sits at -0.43. The pattern also resembles the negative correlation periods seen in summer 2021 and August 2024, both of which coincided with meaningful bitcoin lows. Although bitcoin is frequently described as a leveraged higher beta tech asset that tends to outperform during risk on periods and underperform during risk off periods, the present divergence is notable.

Bitcoin fell as much as 36% from its October all time high. The Nasdaq 100, by comparison, saw a maximum drawdown of only 8% and now trades just 2% below its record high. Bitcoin has yet to recover in the way the broader tech sector has, currently sitting 27% below its all-time high.

The previous negative correlation instance unfolded during the yen carry trade unwind, which pushed bitcoin down to roughly $49,000, a move that ultimately marked a local bottom. Before that, negative correlation appeared in September 2023 when bitcoin traded just below $30,000, followed by a rally to $40,000 by year end. The first instance occurred in May 2021 during the China mining ban, when bitcoin fell from $60,000 to $30,000 before recovering to new highs in November 2021.

Taken together, these episodes show that negative correlation between bitcoin and the Nasdaq 100 has often emerged near significant turning points in bitcoin. While the current setup suggests another bottom may be forming, the timing of any rebound remains uncertain.