In a week marked by gains for major assets like Gold and the Nasdaq 100, Bitcoin has significantly underperformed, signaling a potential decoupling from traditional market behaviors. According to data from Coingecko, Bitcoin’s price has decreased by approximately 2.09% over the past seven days, while safe-haven gold experienced a robust 4.85% increase and the risk-sensitive Nasdaq 100 Index rose by 1.34%.
Traditionally, Bitcoin has mirrored movements in the Nasdaq 100, maintaining a high correlation throughout much of the year. This relationship seemed to hold until early last week, when an optimistic sentiment took hold after Federal Reserve Chair Jerome Powell hinted at possible interest rate cuts during the upcoming October FOMC meeting. This optimism initially bolstered both the Nasdaq and Bitcoin, but a noticeable shift occurred on October 15. From 9 am UTC onward, the Nasdaq 100 ended the week up by 0.44%, in stark contrast to Bitcoin, which tumbled by 3.71%.
Several analysts attribute this divergence to a significant market event that transpired on October 10, wherein over $19 billion in positions were liquidated amid a sharp crypto market crash, instilling fear and uncertainty among investors. TeddyVision, an analyst at CryptoQuant, pointed out changes in stablecoin inflows to exchanges as revealing trends. Between August 1 and mid-October, inflows of USD Coin (USDC) to exchanges for spot buying diminished, whereas Tether (USDT) inflows to derivatives exchanges saw an increase. This may indicate that actual asset purchases were declining while liquidity in leveraged derivatives, such as futures and perpetual contracts, remained high.
Such dynamics suggest that the recent price increases were possibly driven not by genuine demand but by speculative leverage and synthetic positions associated with derivatives trading and capital rotation related to ETFs. The aftermath of the October 10 crash likely eliminated speculative buying pressures, elucidating why Bitcoin failed to ascend alongside the rebounding Nasdaq 100.
Despite this challenging situation, Bitcoin demonstrated a minor recovery on Sunday, crossing the $108,000 threshold for the first time since its drop. Moving forward, Bitcoin’s ability to follow the Nasdaq’s recovery could hinge on factors like potential de-escalation in the ongoing US-China tariff conflict. This geopolitical climate initially pressured Bitcoin, causing its value to fall from approximately $122,000 to around $100,000. Recent comments from President Donald Trump indicated a belief that the high tariffs imposed on China were more of a negotiating tactic than a sustainable approach. Furthermore, upcoming discussions between Treasury Secretary Scott Besent and Chinese Vice Premier He Lifeng are set to address trade issues and could pave the way for a potential US-China summit at the APEC meeting later this month.
Investor sentiment appears resilient despite Bitcoin’s two-week downturn, as illustrated by the rapid recovery of altcoins. While Bitcoin fell nearly 2%, Ethereum (ETH) rose by 5.96%, and Solana (SOL) gained 7.12%, indicating that smaller-cap altcoins are rebounding faster than Bitcoin itself.
Looking ahead, the coming week will bring crucial macroeconomic indicators, including delayed Consumer Price Index (CPI) data, due to the recent government shutdown. Additionally, manufacturing and service PMI figures and the University of Michigan Inflation Expectations will be released, adding further context to the market landscape. These data points could significantly influence market direction and investor sentiment in the near term.
