Why Bitcoin Isn’t Keeping Up With the NASDAQ

Bitcoin (BTC) has dropped over 6% in the past week, diverging from its typical positive correlation with the tech-heavy Nasdaq Composite Index. While some attribute Bitcoin’s decline to the Federal Reserve signaling only one U.S. interest-rate cut for the rest of the year, tech stocks have continued to rise, suggesting that crypto-specific factors may be preventing BTC from keeping pace with the Nasdaq.

Markus Thielen, founder of 10x Research, explains, “When a market repeatedly sells off at a particular level, it’s less about events, narratives, or fundamentals. Instead, a large seller perceives prices to be overvalued at that level. The all-time high of nearly $70,000 in November 2021 is a level where long-term holders are willing to sell their Bitcoins, as they are the most likely candidates to cash out.”

Earlier this week, a wallet inactive since 2018 moved 8,000 BTC worth over $500 million to the crypto exchange Binance, often signaling an impending sale. This wallet reportedly acquired the BTC for less than $4,000.

Data from analytics firm CryptoQuant shows that the number of BTC inactive for at least 12 months and two years has declined, indicating that holders have taken profits as Bitcoin’s price remains near record highs. Ilan Solot, co-head of digital assets at Marex Solutions, noted, “Addresses with supply inactive for 1 and 2 years have been selling since the price hit record highs, offsetting accumulation by longer-term holders (3+ years).”

Thielen adds that 1.8 million BTC have not moved for over a decade, potentially including the 1.1 million BTC mined by Satoshi Nakamoto. “This is why we expect most of the Mt. Gox holders to convert their BTC into fiat once they take possession of their BTC in October/November 2024,” Thielen noted.

Mt. Gox, a crypto exchange that collapsed due to a hack in 2014, is preparing to distribute 142,000 Bitcoin (BTC) worth roughly $9.5 billion and 143,000 Bitcoin Cash (BCH) worth $73 million to creditors. This distribution, set for October 31, 2024, could significantly impact digital asset prices.

Increased selling by miners may also contribute to BTC’s price weakness. Miners, who earn BTC as a reward for validating blocks on the blockchain, have been selling more. Listed miner Marathon Digital (MARA) sold 1,400 BTC worth $98 million this month. CryptoQuant reports that miners sold at least 1,200 BTC on June 10, the highest single-day volume in over two months. The hashrate, or computing power dedicated to the Bitcoin blockchain, has declined from 622 exahashes per second (EH/s) to 599 EH/s this month, indicating miner capitulation.

It’s also important to note that despite the NASDAQ’s strong performance, not all stocks are participating equally. Only 62% of Nasdaq 100 stocks are above their 200-day moving average, suggesting that fewer stocks are in an uptrend despite the index being at all-time highs. This often serves as a warning signal before a market correction.