Introduction I had the idea for this post around mid-week, well before the Nasdaq 100 started falling apart on Friday. I asked three different AI engines, one of which I actually pay for (Grok) the same question and maybe not surprisingly, all three came up with about the same answer. I choose the most salient points in for the AI Response, below. However, special attention should be given the final correlation, i.e., Bear Market Warning Sign. In any case, both my Query and the AI Response are presented in about a timely a subject as we have had for a Weekend Update in a long time. Enjoy...and take heed, as the implications for trading are significant...and in a good way. Query: Is there a correlation between Bitcoin and the Nasdaq 100? AI Response Yes, there is a strong, well documented price correlation between Bitcoin and the Nasdaq-100, particularly since 2020 with Bitcoin behaving increasingly like a high-beta technology stock, though the relationship is complex, frequently shifts, and often functions more as a concurrent reflection of risk appetite than a guaranteed, long-term crystal ball. While it has functioned as a high-beta indicator of technology stocks, recent data suggests the correlation can diverge. Key insights on the Bitcoin-Nasdaq relationship as of June 2026: High-Risk Proxy: Bitcoin frequently trades like a high-risk, "high-beta" version of technology stocks. Due to its 24/7 trading nature, it can show market sentiment shifts before traditional markets open. High Correlation: As of April/May 2026, Bitcoin's correlation with the Nasdaq-100 was exceptionally high, hovering around 0.80–0.96, meaning they often move in tandem, particularly during risk-off events. Decoupling Potential: While often correlated, Bitcoin and Nasdaq can diverge. For example, in late 2025/early 2026, the Nasdaq continued to rally on "Magnificent 7" earnings while Bitcoin experienced a correction. Institutional Influence: The rise of Spot Bitcoin ETFs and institutional holding (e.g., MicroStrategy, IBIT) has tightly linked Bitcoin’s price movements to the broader macro environment and tech sentiment. Bear Market Warning Sign: A significant decline in Bitcoin can sometimes precede a drop in the Nasdaq, acting as an early warning for high-risk assets, due to shared liquidity and investor bases. Allan's "Intelligence" (The other AI) If so, then we are in for a rock and roll summer into fall for the QQQ. Friday's price action may very well be the beginning salvo in what could be a 50% haircut in the index. My thesis in a chart, or two: Bitcoin Weekly Bitcoin Weekly - Precursor of what is to come for the Q's? Key observation: Impulsive decline shows no sign of abatement and Fib extension is suggesting a completed fifth wave between $42K - $27K. QQQ Weekly - Bitcoin pattern top; nine months delayed Friday's decline is barely a blip in the above Weekly chart. However, look again at the Bitcoin Weekly chart, as the BTC 50% (so far) haircut also started out as a blip on a chart. QQQ Daily Two lows to be tested, 695 (May 19th), followed by 555 (Mar 30th). QQQ 120 Minute The shorter the time frame, the more bearish the short-term outlook. The assumption, with confirmation through AI query, is that the Nasdaq 100 (QQQ) will put in a top six-to-nine months after Bitcoin's top. That may have just occured. Then, the Nasdaq 100 will follow Bitcoin's decline, currently about a 50% haircut over another six-to-nine months following the top. That covers the rest of 2026. Five waves up, Top, five waves down, taking QQQ down about 50% from its high tick and maybe lower. The structure is that of a multi-year rally in five waves followed by a multi-month severe decline, changing sentiment from ultra ebullient to throwing in the towel and it is classic Elliott Wave theory, unfolding before our very eyes, right here, right now. When the dust settles, a buying opportunity of a lifetime, but, let's not get ahead of ourselves; first, a Top, then a decline. The clock is ticking. Strategy Going Forward We shorted Bitcoin (with IBIT puts) a little late, but, still have generated some reasonably decent wins. We added QQQ puts this past week to both Premium and PRO Services. The trading hypothesis is we have seen just the tip of the reversal down that will unfold more dramatically over the coming months, as did Bitcoin coming off of its own reversal down in the fall of 2025. While we are starting with July QQQ puts to join our July Bitcoin puts (IBIT), we will be adding puts in individual stocks and ETF's as this ongoing bear market unfolds. IBIT - Premium Service IBIT - Pro Service Sometimes...we get it right. Our recent short Bitcoin trades are guaranteed triples, basis the 50% trailing stops. Next up, or I should say down, QQQ put positions during the next leg lower, targeting below 600. Click Active Options for current positions Active Options Premium Service PRO Service
