Bitcoin (BTC) Long-Term Recovery Is Closely Tied to Nasdaq's Ability to Trend Upward

Research service Ecoinometrics stated on Monday that bitcoin's (BTC) long-term recovery is closely tied to the Nasdaq's ability to trend upward, highlighting the

The strong positive correlation between bitcoin (BTC) and the Nasdaq is crucial for the cryptocurrency’s long-term recovery, according to research service Ecoinometrics.

However, the tech-heavy index triggered a major bearish reversal pattern on Monday, putting BTC’s 200-day simple moving average (SMA) support at risk.

Bitcoin price dropped over 10% in the past 24 hours, erasing Sunday’s price rally to $95,000. At one point early Monday, the price tested the 200-day SMA support at $82,587, as shown by the chart from TradingView.

The 200-day SMA is commonly regarded as a key indicator of long-term trends, and price declines below this level are often seen as a signal of potential significant losses ahead.

The possibility of BTC’s price moving below the long-term average cannot be ruled out, as Wall Street’s Nasdaq fell 2.2% on Monday, triggering a double top breakout.

A double top comprises two peaks separated by a trough and takes roughly two to six weeks to form. The gap between the two peaks must be equal to or less than 5%, with the spread between peaks and the trough being at least 10%, according to technical analysis theory.

These are guidelines and not rules; the backdrop is more important, meaning the pattern should appear after a prolonged uptrend to be valid, which is the case with Nasdaq.

Nasdaq has formed two peaks at around $22,200 since mid-December, with a trough at $20,538. The index closed on Tuesday below the trough support, confirming the double-top bearish reversal pattern.

Per technical analysis theory, the subsequent decline could be at least 70% of the distance between the peaks and the trough, which means the Nasdaq could go as low as 19,400. The pattern’s historical failure rate is 11%, according to CMT’s analysis books. This means that breakdowns lead to deeper losses more often than not.

Both Nasdaq and BTC lost bullish momentum in December and have since peaked to trade nearly at their respective 200-day averages.

Below the 200-day SMA, the next support for bitcoin is seen directly at the former record high (resistance)-turned-support at $73,757.