Bitcoin is trading around $74,500, tracking US equities more closely than before: its correlation with stocks has risen to about 0.8, the highest since May 2022. When equities fall, Bitcoin typically falls too, and vice versa. By contrast, in May 2024, the 90-day correlation between Bitcoin and the Nasdaq 100 was only 0.46. In two years, the market has gone from betting on crypto's independence to near-complete overlap with the tech index.
A fresh example made the connection clear. Bitcoin climbed above $81,000 after the election results, following the equity rally, but on Thursday, the Nasdaq 100 plunged by 6.4% and Bitcoin lost 5.8%, falling below $76,000. The main hit landed on chipmakers and AI-tied companies, and the Democrats' win intensified fears of tighter regulation for the sector. Notably, Bitcoin fell less than the Nasdaq.
The reason is that the same investors often hold growth stocks and Bitcoin and sell both when they cut risk. Other channels amplify the link: miners redeploying capacity for AI data centers mean some players are no longer purely crypto-native.
However, high correlation has a flip side. There was once talk that money was flooding into AI and leaving little for crypto — five tech giants added almost $1 trillion in a single day, while liquidity clustered in AI-linked names. Now AI is out of favor, and capital is beginning to search for alternative homes. As part of that rotation, Chinese names such as Tencent and Alibaba rose by at least 6% as traders reallocated. If investors continue exiting overheated tech, some of that flow could settle into crypto and cushion the decline. Yet conditions for that switch remain weak: US spot Bitcoin ETFs saw roughly $1 billion of outflows after the Binance hack, retail interest is cooling, and short-term holders are largely underwater.
There is also a major liquidity competitor: Anthropic's planned mega-IPO could siphon free capital. My view is that until the tech sector stabilizes, Bitcoin will continue to shadow the Nasdaq, and any notable flow from AI into crypto will emerge only after ETFs return to steady inflows.
Bitcoin
Bitcoin is trading in a tight range between $74,200 and $74,800. The plan centers on two mirror strategies with full breakout and rejection scenarios. In the bull case, buy on a confirmed break above $74,800 provided the price holds above the 50-day moving average and the Awesome Oscillator is above zero, with the initial target of $75,400 (lock in profits there and consider a short on the pullback). Alternatively, if a dip below $74,200 proves a false breakout and the price reclaims the band, buy at $74,200 with targets of $74,800 and then $75,400. In the bear case, go short on a confirmed break below $74,200 when the moving average sits above the price and the Awesome is below zero, targeting $73,600. Conversely, if a false breakout above $74,800 reverses, a pullback from that level would make it possible to go short, aiming for a return to $74,200 and then $73,600.
Ethereum
The logic mirrors Bitcoin on its own scale. The range is defined by the levels of 2,122 and 2,136, with secondary anchors at $2,091 (support) and $2,158 (resistance). Long positions could be considered on a confirmed break above $2,136 provided the price is above the 50-day MA and the Awesome Oscillator is above zero, targeting $2,158 for profit-taking. Alternatively, buy on a false breakout below $2,122 that reverses back above, aiming first for $2,136 and then $2,158. Short positions would be prudent on a confirmed break below $2,122 when the moving average sits above the price and the Awesome is below zero, targeting $2,091. Or, go short on a false attempt to break $2,136, looking for a return to $2,122 and then $2,091.
Both the moving average and the Awesome Oscillator should be used as filters to weed out false moves. They are not standalone entry signals. Trades should be taken only after the price confirms the levels outlined above.