Nasdaq plunges, gold soars, where does Bitcoin go from here?

On the whole, if the stock market crash is similar to historical trends, gold may become the ultimate safe-haven asset, and Bitcoin's market positioning will be severely challenged.

The Nasdaq index has fallen 12% so far. If this adjustment turns into a bear market and the correlation between the Nasdaq and Bitcoin remains unchanged (that is, for every 12% drop in the Nasdaq, Bitcoin falls 24%), then when the Nasdaq falls by 20%, the price of Bitcoin may still remain at about $65,000. However, if the Nasdaq enters a true bear market, the decline may be far more than 20%.

Historical data shows that the Nasdaq index plunged nearly 80% after the tech bubble burst; during the 2008 financial crisis, it fell 55%; and when the epidemic broke out in 2020, the Nasdaq also fell 30% at one point. The average decline in these three bear markets is about 55%. Even if the bear market falls less, at 40%, Bitcoin could fall 80%, to around $20,000. But given Bitcoin's high volatility, it's not impossible to see prices fall below $20,000 or even lower if the sell-off intensifies.

On the other hand, gold has always had a negative correlation with the Nasdaq. Since the Nasdaq peaked on December 16, 2023, gold has risen 13%, forming an almost perfect 1:1 negative correlation. If this trend continues, gold could break $3,800 when the Nasdaq falls 40%. However, if the stock market crash is accompanied by a significant depreciation of the dollar in the foreign exchange market, gold could rise far more than $3,800.

If gold rises to $3,800 and Bitcoin falls to $20,000, the price of Bitcoin denominated in gold will fall by more than 85%. This will completely shatter the market expectations of Bitcoin as a "digital gold" or "value storage" asset. At that time, governments and institutional investors will lose the reason to hold Bitcoin, and the US and state governments will not include Bitcoin in their strategic reserves. In addition, Bitcoin ETF investors may also sell off their assets in large quantities, further exacerbating market selling pressure. In this case, companies such as MicroStrategy that hold a large amount of Bitcoin may find it difficult to maintain the stability of their balance sheets and eventually face the risk of bankruptcy.

Overall, if the stock market crash is similar to historical trends, gold may become the ultimate safe-haven asset, and Bitcoin's market positioning will be severely challenged. Whether Bitcoin can successfully break away from the risky asset attributes of technology stocks in this environment and truly establish the value positioning of "digital gold" will become the key to future market attention.