Is Bitcoin’s Weakness a Warning Sign for the Nasdaq 100?

A Thoughtful Friend’s Perspective

Recently, I received an email from a friend who has extensive experience in the Asian markets. While he admits to not fully understanding bitcoin, he sees it as an early warning indicator of liquidity and risk appetite.

Bitcoin’s Recent Performance

According to my friend, bitcoin recently broke its long-term uptrend, rallied to the underside of the broken uptrend, and failed. This suggests a potential kiss of death. Historically, bitcoin has peaked before the Nasdaq 100 index by 1-3 months. The recent divergence between falling bitcoin and a rising Nasdaq 100 may indicate an upcoming correction.

Analyzing the Charts

Let’s take a look at the charts to better understand the situation.

Nasdaq 100 vs Bitcoin Futures

In this weekly close-only line chart, we can see that bitcoin futures turned lower in late June, while the Nasdaq 100 index peaked in mid-July.

Bitcoin Futures Contract

Looking at the bitcoin futures contract, we can observe a weak and vulnerable chart. Prices appear to be heading towards a test of the rising 200-day moving average line. The daily On-Balance-Volume (OBV) line is also weak, indicating a downward trend.

Bottom-line Thoughts

Based on technical analysis, it is common for analysts to look for leading indicators within stocks or indexes. If the current weakness in bitcoin continues, it may foreshadow further weakness in the Nasdaq 100.

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