The Nasdaq (NDX) retreated last week, leaving behind a nasty looking candle. However, when measuring the underlying trend strength, tech stocks could have a lot more to go. And if that’s the case, it could be bullish for Bitcoin according to a new historical comparison.
The Nasdaq (NDX) Gives Back Recent Gains Ahead Of FOMC Meeting
The Nasdaq is down more than 3% from the 2023 high set last week as traders took profit and repositioned ahead of Wednesday’s FOMC meeting. At the meeting, the US Fed is widely expected to introduce yet another 25-basis point rate hike.
The rising interest rate environment of 2022 sent stocks and cryptocurrencies into a bear market. The idea of a Fed pause helped markets recover throughout the year. Resuming rate increases so soon could be damaging to the recent market rebound.
However, the bullish trend might be too strong at this point to stop the Nasdaq, a top US tech stock index, from reaching a new all-time high. This is according to the weekly Average Directional Index on the NDX.
In the chart below, the NDX weekly Average Directional Index is seen at a level prior to the 2020 bull run in crypto. Notably, during this time, tech stocks vastly outperformed cryptocurrencies.
Will BTC catch up to tech stocks?| NDX on TradingView.com
Why The Setup Could Revive A Bullish Bitcoin
It’s also worth noting that tech stocks tend to lead broader financial market recoveries. Historically, this sign of economic health returning caused cryptocurrencies like Bitcoin and Ethereum to flourish from the resulting confidence.
In the comparison above, after a short retracement in the tech stock basket, Bitcoin then broke out and stole the show with extreme overperformance. The most significant similarity between then and now, is that the NDX and BTCUSD are demonstrating the same trend strength as the last time the divergence in the correlated price action occurred.
During the last instance, Bitcoin pulled back the same time the Nasdaq did, yet when it resumed its bullish trend it came back a very different cryptocurrency. It was the parabolic BTC that rocketed from $10,000 to $60,000 in just a handful of months. With Bitcoin near $30,000 per coin, another 6x performance from here could take the top cryptocurrency closer to $180,000 per coin if the price action plays out similarly.
Sui Foundation Allocates Over $1M to 17 Emerging Projects
Ahmedabad authorities bust international drug ring with cryptocurrency links
Vitalik Buterin Explores Ethereum Protocol Enhancement Strategies
Ethereum Shanghai Upgrade: What you need to know
Why is Ethereum (ETH) price down today?
Nissan files 4 new web3 trademarks, trials sales in the metaverse
News from Twitter: