Related Topics
Currencies , Stocks
     

Will Bitcoin Go the Way of the NASDAQ?

Correlations between financial markets are never permanent, but the current one...

by Bob Stokes
Updated: September 21, 2022

In our more than 4 decades of observations, Elliott Wave International has concluded that the use of the Elliott wave model is the single best way to analyze financial markets.

That said, technical and sentiment indicators are also useful. Elliott Wave International's analysts review literally dozens of these regularly.

It's also a good idea to pay attention to correlations in financial markets.

Our Sept. 16 U.S. Short Term Update focused on one of those correlations with this chart and commentary:

MirrorImage

Risk assets are currently showing a high level of positive correlation. This chart shows the 120-day correlation between bitcoin and the NASDAQ 100 index, which is near its highest level in 12 years. Correlations, both positive and negative, are never permanent but the current one between these two assets has been positive since early 2020. Many investors assumed, incorrectly, that bitcoin was store of value, a hedge against inflation and falling stocks. But stocks and bitcoin have been trending together for years.

With the above analysis in mind, Bitcoin investors may want to pay attention to the trend of the tech-heavy NASDAQ 100.

Note that on August 4, Barron's said:

Mom and pop investors are pouring money into cryptocurrencies.

The same thing was going on with technology stocks around the same time, as our August Elliott Wave Financial Forecast spelled out with this chart and commentary:

TechStocks

The depth of the dip-buying zeal is evident by a late-July retail surge into technology stocks. According to Vanda Research, investors pushed about $580 million into a basket of tech stocks, the highest total since at least 2014, and probably ever. "I'm extremely bullish tech stocks," one 27-year-old investor told The Wall Street Journal.

You'll find analysis of the NASDAQ 100's Elliott wave pattern, including near-, intermediate- and long-term, in our popular Financial Forecast Service.

Considering the correlation thus far, ascertaining the price trend of the NASDAQ 100 may help you to get a handle on Bitcoin (in addition to the NASDAQ 100).

I say "may" because there are no guarantees with any analytical method, including the Elliott wave method. Also, as mentioned above, the correlation between Bitcoin and the NASDAQ 100 may or may not persist.

That said, the correlation has been in place for some two-and-a-half years.

Follow the link below to get timely financial insights now.

Independence from the Crowd Can Be “Highly Rewarding”

When an Elliott wave is complete, it brings striking clarity to the market's... likely future direction. Such junctures offer complete independence from the herd, and those times tend to be highly rewarding.

That is from Robert Prechter's landmark book, The Socionomic Theory of Finance.

Imagine knowing the market's "likely future direction" -- regardless of the news!

In our almost 40 years in the business, we have yet to see a forecasting method that surpasses the usefulness of the Elliott wave model.

Learn what the Elliott wave model suggests is next for U.S. stocks, bonds, gold, silver, the U.S. dollar and more by following the link below.

Financial Forecast Service

$97

All month long, Financial Forecast Service helps you stay ahead of the waves in the U.S. markets on the timeframes that matter the most. FFS covers the stock indexes, bonds, gold, silver, the U.S. dollar, as well as market psychology and cultural trends. It is our most popular service.

Comprises the monthly Elliott Wave Financial Forecast, 3x-per-week Short Term Update and at least 12x-per-year Elliott Wave Theorist.

EXCLUSIVE

Shanghai Composite: Does the Rally Have Legs?

Chinese stocks have risen strongly off their October lows. With all the political turmoil in China, many are wondering if the rally is just a flash in the pan. Our Asian-Pacific Short Term Update editor, Chris Carolan, walks you through the Shanghai Composite's Elliott wave pattern to give you an unvarnished, objective answer.

EXCLUSIVE

2024 Presidential Race: 3 Dow Levels to Watch

With the midterms in the rearview mirror, let's look ahead to the 2024 presidential race. Polls have infamously missed the mark over the past few election cycles. Discover how you can use the stock market to anticipate the election outcome without polling a single person.

Chinese Stocks vs. Protests: Which Leads, Which Follows?

On TV, financial pundits connect the day's news to market action all the time. But watch our monthly Asian-Pacific Financial Forecast editor, Mark Galasiewski, walk you through the timeline of China's recent protests and the action in the Shanghai Composite to dispel (yet again) the myth that "news drives markets."