- Bitcoin price recovery rally has fizzled in the past few days.
- The correlation between Bitcoin and Nasdaq 100 has continued.
The Bitcoin and Nasdaq 100 index correlation continued on Monday after signs of a global economic slowdown emerged. Bitcoin retreated to about $29,500 while futures tied to the Nasdaq 100 index declined by more than 30 points.
Bitcoin and Nasdaq 100 correlation
The Nasdaq 100 index is one of the biggest indices in the United States with a market cap of more than $10 trillion. It is made up of some of the best-known technology companies in the US like Microsoft, Apple, and Nvidia among others.
While many companies in the index are highly profitable, many others are highly unprofitable. This includes companies like Okta, DocuSign, Teladoc, and Peloton. Therefore, the Nasdaq 100 index is known for being riskier than S&P 500 and the Dow Jones indices.
As such, investors put the Nasdaq 100 index in the same category as cryptocurrencies since they are both risky assets. Investing in Bitcoin is risky because it is a relatively new cryptocurrency and there are concerns about how it will survive in the future. However, the Bitcoin price has dropped, so for some people this is a good opportunity to buy Bitcoin right now.
Nasdqa 100 and Bitcoin tends to perform well in a period of low interest rates and quantitative easing. This explains why the two assets surged to record highs in 2021.
Now, the two assets are falling sharply as the Federal Reserve embraces a more hawkish tone. The bank has already hiked interest rates by 0.75% and there are signs it will hike by 100 bps in the next two meetings. It will then start implementing smaller rate hikes of 0.25% for the rest of the year.
This explains why Bitcoin price has fallen by more than 60% from its all-time high. The Nasdaq index has dropped by more than 20% this year.
Bitcoin price prediction
The daily chart shows that the BTC price formed a hammer pattern as it crashed to $25,000. In price action analysis, this pattern is usually a bullish sign. A closer look shows that the coin has found a lot of resistance at the $30,000 level. It remains below the 25-day and 50-day moving averages.
Therefore, at this stage, it is hard to judge whether the coin has made a strong recovery. This outlook will be confirmed if the coin manages to move above the important resistance at $33,000. It will also be determined by the performance of the Nasdaq 100 in today’s session.
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