Bitcoin Declines More Rapidly Than Nasdaq as Correlation Shift Becomes Negative

Bitcoin's Correlation with Nasdaq: Bitcoin's 30-day correlation with the Nasdaq 100 has reached 0.80, the highest since 2022, indicating a strong relationship where Bitcoin tends to drop more sharply during stock market declines while recovering less during rallies.

Market Decline and Liquidity Issues: The crypto market has lost $1.1 trillion in value over 41 days, with Bitcoin dropping 25% in a month, attributed to reduced liquidity, stalled stablecoin supply, and a shift in investor focus towards mega-cap tech stocks.

Loss of Safe Haven Status: Bitcoin's correlation with traditional safe-haven assets like gold has diminished, with gold outperforming Bitcoin by 25 percentage points since October, raising concerns about Bitcoin's effectiveness as a hedge in the current market environment.

Bear Market Conditions: The current market is characterized as a "leverage and liquidation-based bear market," with Bitcoin behaving more like a leveraged tech stock rather than a stable digital asset, reflecting a high downside beta and weak upside response.