Chart of the Week | Nasdaq vs Bitcoin

Good morning everyone and welcome to our Chart of the Week series! Every week we provide you with one of the most informative Bitcoin charts, sent directly to your inbox.

This week we dive into the Nasdaq index, and how closely Bitcoin tracks the performance of the technology index.

Let’s dive in!

This week has proven tumultuous in US equity markets with the launch of Chinese AI model Deepseek, putting major pressure on US megacap tech companies that in turn account for a large overall share of the Nasdaq Index.

One such example was Nvidia, which saw the largest market cap loss in history, with the combined stock market seeing an evaporation of near $1 trillion dollars in value on Monday alone.

This has brought forward substantial discussion regarding the impact that a selloff in tech stocks may have on bitcoin’s price. The prevailing wisdom within the traditional finance space is that Bitcoin represents “Nasdaq with leverage” and simply behaves as a risk-on asset similar to tech stocks.

Correlation

So what does history tell us about this relationship? The Nasdaq index has certainly performed well over the past two decades; the chart below shows the Nasdaq futures in log form, adjusting for contract changes:

Next, we can add bitcoin’s price to find the correlation that the two have in their relationship with one another:

A correlation coefficient of 1, is a positive 1:1 correlation whereas a -1 correlation shows a negative 1:1 correlation. There is a lot of noise in the early days of BTC, but as the asset matured, a much clearer positive correlation starts to appear, with very little time spent below 0.

Zooming in to the mainstream adoption era post 2017, and taking the chart’s timeframe up to a 2-week chart, the correlation becomes quite clear:

Both the bitcoin bear markets of 2018 as well as the bear market of 2022 are very strongly correlated with bear markets in the Nasdaq. Similarly, the bitcoin bull markets of 2017, 2021 and 2024 all correspond to bull markets in the Nasdaq.

Timeframes Matter

It’s important to note that while correlation over longer timeframes is indeed positive in nature, this chart shows that there is an inordinate amount of noise in trying to trade this correlation on a daily or short-term basis. Only over longer timeframes do a useful correlation appear.

Summary

While there is indeed a longer-term positive correlation, trying to trade that correlation on a short-term basis would be incredibly difficult, as a lot of noise exists on smaller timeframes. Some investors may be wondering “if bitcoin just follows the returns of the Nasdaq, why risk my capital on a newer, more volatile asset class with no cash-flow?”.

This final chart shows Nasdaq futures relative to bitcoin (NQ1!/BTCUSD), and this chart is in log format. We can see that Nasdaq has dramatically underperformed bitcoin. Nasdaq may indeed provide decent returns in fiat terms, but relative to bitcoin, remains a poor performing asset.

if this chart isn’t a resounding motivation to hodl Bitcoin over the long run, we don’t know what is - remember to stay humble and stack sats!