Bitcoin Shows Relative Strength Against Nasdaq as QQQ Pullback Reveals Shift

Bitcoin has shifted to a position of relative strength against the Nasdaq, according to an analysis published by Kitco. The assessment rests on comparing how each asset behaves against its own recent price action, support and resistance rather than on which one posted a larger percentage move, since crypto assets carry more beta than equities and tend to swing further in both directions.

A Year of Weakness, Then a Reversal

For roughly a year, beginning with the crypto bear market that started last fall, the comparison favored the Nasdaq. Bitcoin was printing lower lows while the Nasdaq was making higher highs, a pattern the analysis describes as clear relative weakness. That relationship has since flipped. The Nasdaq has undergone a substantial pullback since October 6th, and during that stretch Bitcoin's decline slowed, stopped, and then held support even as the Nasdaq fell further. On both the daily and weekly time frames, Bitcoin now shows relative strength versus the Nasdaq.

Valuation and Sentiment

The analysis attributes the shift to stretched conditions on both sides. Stocks are described as having become overvalued after a strong run, with the Shiller CAPE ratio near 41, a level the author says is higher than almost any period in history outside the dot-com bubble. Bitcoin, by contrast, was bearish for so long that it appears to have found a bottom in July. In short, the Nasdaq looked overbought while Bitcoin looked oversold.

The analysis cautions that Bitcoin still trades as a risk asset and generally moves in the same direction as risk assets. A sharp Nasdaq decline would therefore not be expected to push Bitcoin higher at the same time. On days when the Nasdaq rises, however, Bitcoin is expected to outperform because of its relatively bullish posture. This pattern is said to appear across time frames, including the one-minute chart during volatile periods such as the market open, where Bitcoin has been falling less than the Nasdaq on declines and rebounding more on bounces. The behavior is described as consistent over the past couple of weeks.

Altcoins Lag Behind

Altcoins present a different picture. They have been lagging Bitcoin and appear to be tracking the Nasdaq more closely. The analysis uses TOTAL3, the total crypto market cap excluding Bitcoin and Ethereum, as the gauge for altcoins as a group, applying the same comparison against both Bitcoin and the Nasdaq to determine which one the group is following.

Price Levels and Momentum

Bitcoin had been described earlier in the week as stuck between $81,000 and $82,800. It has since broken out, pushing through $82,800 and trading around $84,500 at the time of writing. Since the Nasdaq's pullback from its October 6th all-time high, Bitcoin dropped into the $81,250 zone and held there, wicking below it on days when the Nasdaq was selling off but closing back above it. When the Nasdaq finally bounced, Bitcoin bounced sharply.

Measured across the full pullback, Bitcoin fell from around $86,500 to $81,250 and has recovered more than half of that decline. QQQ fell from around $760 to $710 and has recovered less than a third. The analysis reads this as measurable relative strength to the upside.

Momentum indicators are described as in agreement. Bitcoin shows a green dot on the daily Market Cipher B, and Swell Point is also described as looking bullish. QQQ has reclaimed a diagonal trend line it lost the prior week, which the analysis treats as a tailwind rather than a headwind for Bitcoin. A one-week red dot from Sunday remains in place, and the author is watching whether daily strength is enough to flip it by the following week.

As long as Bitcoin holds above $82,800, the analysis treats that former resistance as new support. If the Nasdaq keeps bouncing, Bitcoin is expected to keep outperforming. If the Nasdaq rolls over again, Bitcoin is not expected to rally, but it would be expected to hold up better than tech, as it did the prior week.