In a week marked by gains in major assets like Gold and the Nasdaq 100, Bitcoin fell significantly behind. The recent decoupling of Bitcoin suggests it functions neither as a risk-on asset nor as a safe haven.
According to Coingecko, Bitcoin’s value has decreased by about 2.09% in the past week, while gold, regarded as a safe haven asset, rose by 4.85%, and the Nasdaq 100 Index increased by 1.34%.
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What Led to the BTC-Nasdaq Decoupling?
Throughout much of the year, Bitcoin has shown a strong correlation with the Nasdaq 100, generally moving in sync. This trend was evident early last week.
The sentiment was positive up until Tuesday, as Federal Reserve Chair Jerome Powell signaled a possible interest rate cut during the October FOMC meeting and a potential end to Quantitative Tightening (QT). These remarks resulted in minor increases for both Bitcoin and the Nasdaq.
However, the correlation began to break sharply at 9 am UTC on October 15. Following this point, while the Nasdaq 100 closed the week up 0.44%, Bitcoin fell by 3.71%.
Leverage Washout Identified as Main Cause
On-chain analysts attribute the massive crypto crash on October 10, which saw over $19 billion in liquidations and created widespread fear, as a key reason for the decoupling.
TeddyVision, an analyst at CryptoQuant, noted two distinct trends from August 1 to mid-October. By examining the 30-day Simple Moving Average (SMA) of stablecoin net inflows, he found a decline in USDC inflows to spot exchanges (generally used for buying).
Conversely, USDT inflows to derivatives exchanges (often utilized as collateral) increased, indicating a drop in capital for actual asset purchases, whereas liquidity for leveraged derivatives, such as futures and perpetual contracts, surged.
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The Influence of Synthetic Demand
This analysis suggests that recent price increases may not have stemmed from genuine spot demand. Rather, they were likely driven by speculative leverage and synthetic exposure linked to derivatives and ETF-related capital shifts.
The crash on October 10 likely eliminated the market’s speculative buying pressure, which explains why Bitcoin could not keep pace with the recovering Nasdaq 100.
Geopolitical Optimism and Altcoin Performance
Bitcoin experienced a slight recovery on Sunday, surpassing the $108,000 level for the first time since its decline. For Bitcoin to follow the Nasdaq’s recovery this week, attention must return to the potential de-escalation of the US-China tariff conflict, which initially caused its price to drop from $122,000 to $100,000.
The outlook appears cautiously optimistic. In a Friday interview, President Donald Trump expressed that he considers the 100% tariff on China “unsustainable,” revealing that the high tariff was primarily a negotiation strategy aimed at securing concessions on rare earth exports.
Treasury Secretary Scott Besent is set to hold working-level discussions with Chinese Vice Premier He Lifeng this week in Malaysia, aiming to lay the groundwork for a possible US-China summit at the APEC meeting on October 31 in Gyeongju, South Korea.
Despite Bitcoin’s recent two-week decline, investor sentiment remains robust. The rapid recovery of altcoins supports this. While Bitcoin fell by about 2%, ETH rose by 5.96%, and SOL gained 7.12% over the same timeframe, indicating that smaller-cap altcoins are bouncing back quicker than the leading asset.
Upcoming: Key Macro Indicators and Corporate Earnings
This week will also see the release of important macroeconomic indicators, including the delayed CPI data on Friday due to the US government shutdown. Figures for manufacturing and service PMI, along with the University of Michigan Inflation Expectations, will be issued concurrently.
