Bitcoin, U.S. Stocks Plunge Amid Tech Volatility, Geopolitics

Bitcoin and major U.S. stock indices, including the S&P 500, NASDAQ, and Dow Jones, experienced a significant plunge last week, with cryptocurrency prices also taking a hit. This market downturn was driven by a combination of factors, including tech sector volatility, geopolitical tensions, and regulatory uncertainties.

The correlation between Bitcoin and the NASDAQ has been a topic of discussion among investors and analysts. Standard Chartered's Geoffrey Kendrick recently advised investors to "buy the dip" in Bitcoin, citing its increasing correlation with the NASDAQ. This relationship highlights Bitcoin's ties to the tech sector but also raises concerns about its resilience during market volatility.

Bitcoin's price movements have been increasingly influenced by the tech sector, as demonstrated by significant overnight crypto liquidations following a 3% drop in NASDAQ futures. A 3.3% decline in NASDAQ 100 futures ahead of the U.S. market opening further underscored this connection. Nvidia, for instance, saw a 13% pre-market drop after Chinese AI startup DeepSeek unveiled its flagship AI model, R1, which rivals OpenAI's capabilities at a lower cost. Such tech-related shocks can spill over into Bitcoin, as seen in recent liquidation events.

Kendrick cautioned that further NASDAQ liquidation during the U.S. session, compounded by upcoming earnings reports from Microsoft, Meta, and Tesla, could push Bitcoin closer to critical levels. He identified $96,400—the average purchase level for BTC ETFs since the U.S. election—as a key threshold to watch. If Bitcoin approaches this level, market sentiment could shift significantly.

Adding to this, Kendrick pointed to potential disappointment from the Federal Open Market Committee (FOMC) meeting later this week. Hawkish signals or unexpected policy shifts could exacerbate both NASDAQ and Bitcoin's downward trends.

Last week's crypto executive order from the Trump administration added another layer of complexity. The order tasks a working group with evaluating a national digital asset stockpile. However, Kendrick expressed disappointment over the terminology, suggesting "stockpile" implies seized assets rather than purchased ones. Moreover, further action on the order requires Congressional approval, delaying clarity for the market.

Despite this, Kendrick noted that the "hope phase" of the executive order is over