In a week where major assets including gold and the Nasdaq 100 rose, Bitcoin was a significant laggard. The recent decoupling of Bitcoin suggests that this asset is neither a risk-on nor a safe-haven asset.
According to Coingecko, the price of Bitcoin has fallen by approximately 2.09% over the past seven days. This came as safe-haven gold rose 4.85% and the risk-on Nasdaq 100 index rose 1.34%.
What is the cause of BTC and Nasdaq decoupling?
For most of the year, Bitcoin has maintained a high correlation with the Nasdaq 100, typically rising and falling in tandem. This relationship continued early last week.
The mood had been positive until Tuesday after Federal Reserve Chairman Jerome Powell hinted at the possibility of rate cuts and an end to quantitative tightening (QT) at the October FOMC meeting. These statements resulted in small gains for both Nasdaq and Bitcoin.
However, the correlation began to break down rapidly starting at 9 a.m. UTC on October 15th. From that point on, the Nasdaq 100 ended the week up 0.44%, while Bitcoin was down 3.71%.
Leverage washout cited as the main cause
On-chain analysts point out that the major cryptocurrency crash on October 10th, an event that caused more than $19 billion in liquidations and caused fear in the market, is likely the cause.
CryptoQuant analyst TeddyVision highlighted two distinct trends from August 1st to mid-October. He analyzed the 30-day simple moving average (SMA) of stablecoin net inflows to exchanges and found that USDC inflows to spot exchanges (typically used for spot purchases) are decreasing.
Meanwhile, USDT inflows into derivatives exchanges (often used as collateral) increased. This suggests that less money is being used for actual asset purchases. Meanwhile, liquidity supporting leveraged derivatives such as futures and perpetual contracts soared.
The role of aggregate demand
This analysis suggests that it may not have been intrinsic spot demand that drove the recent price increase. Rather, it was likely caused by speculative leverage and synthetic exposures associated with derivative and ETF-related capital turnover.
The October 10 crash may have instantly evaporated any speculative buying pressure in the market, explaining why Bitcoin was unable to rise along with the recovering Nasdaq 100.
Geopolitical hopes and the strength of altcoins
Bitcoin made a slight rebound on Sunday, surpassing the $108,000 level for the first time since the decline. For Bitcoin to successfully track the Nasdaq's recovery this week, it will need to refocus attention on a possible detente in the US-China tariff war that initially caused the price to plummet from the $122,000 level to $100,000.
The mood appears momentarily optimistic. In an interview Friday, President Donald Trump said he did not believe 100% tariffs on China were “sustainable,” suggesting the high tariffs were simply a negotiating tactic to win concessions on rare earth exports.
Treasury Secretary Scott Bescent is scheduled to hold working-level talks with Chinese Vice Premier He Lifeng in Malaysia this week. These talks are aimed at setting the stage for a possible U.S.-China summit at the APEC meeting to be held in Gyeongju, South Korea, on Oct. 31.
Despite Bitcoin's two-week decline, investor sentiment remains strong. The rapid recovery of altcoins proves this. While BTC is down about 2% during the same period, ETH is up 5.96% and SOL is up 7.12%, indicating that low-cap altcoins are recovering faster than benchmark assets.
Looking ahead: Macro indicators and earnings
This week will also see the release of key macroeconomic indicators, including CPI data, which was delayed until Friday due to the U.S. government shutdown. PMI numbers for manufacturing and services and the University of Michigan's inflation expectations will also be released at the same time.
