Citi Analysis: Bitcoin as Leading Indicator for Big Tech Stocks Amid Liquidity Concerns

This analysis is based on the MarketWatch report [1] published on November 7, 2025, which highlighted Citi strategists’ findings about Bitcoin’s role as a leading indicator for Big Tech stocks. The report, authored by Dirk Willer’s team, identifies a critical correlation between cryptocurrency movements and Nasdaq performance, suggesting that current tech sector weakness stems primarily from liquidity constraints rather than fundamental concerns about AI investment returns [1].

The timing of this analysis coincides with significant market stress, as the Nasdaq Composite has declined 3.8% from its record high, while the Nasdaq 100 fell 1.71% on November 6, 2025 [0]. Bitcoin’s concurrent decline to $100,271.69 represents a 1.01% drop and confirms its entry into bear market territory, defined as a more than 20% decline from recent peaks [0][1].

Citi’s analysis centers on Treasury General Account (TGA) dynamics, which have exceeded $900 billion—a level historically associated with Treasury halting account rebuilding in the post-COVID period [1]. This liquidity drain, compounded by approximately $500 billion in declining bank reserves since mid-July, has created systematic pressure across both crypto and equity markets [1]. The analysis reveals that Bitcoin demonstrates greater sensitivity to pure liquidity conditions compared to equities, making it a valuable leading indicator.

The quantitative evidence supporting Citi’s thesis is compelling. Historical analysis shows that the Nasdaq 100 performs significantly better when Bitcoin trades above its 55-day moving average [1]. A strategy of being long NDX only when Bitcoin exceeds its 55-DMA (with 1-3 day lags) improves the information ratio from 0.95 to 1.4, demonstrating substantial predictive value [1]. Currently, Bitcoin’s position below this technical level suggests continued headwinds for technology stocks.

The Bitcoin-Nasdaq correlation represents a significant evolution in market dynamics, where cryptocurrency has emerged as a proxy for pure liquidity conditions. This relationship creates both opportunities and risks for tech investors, as crypto market movements can now serve as early warning signals for equity performance [1].

Major technology companies face a critical tension between strong fundamentals and elevated valuations in a liquidity-constrained environment. NVIDIA Corporation (NVDA) maintains robust YTD performance of +35.98% but trades at a demanding 52.92x P/E ratio [0]. Similarly, Apple Inc. (AAPL) demonstrates strong profitability with 26.92% net margins but carries a 36.00x P/E multiple [0]. In normal liquidity conditions, these valuations might be justified by growth prospects, but in the current environment, they create vulnerability to multiple compression.

The broad market weakness extends beyond technology, with Industrials declining 2.28% and Consumer Cyclical sectors down 2.13% [0]. This suggests a systemic liquidity impact rather than sector-specific issues, potentially indicating a broader rotation from growth to value as investors seek refuge from valuation pressure in tighter liquidity conditions.

: The ongoing Treasury General Account rebuilding and declining bank reserves represent a systematic risk that could persist until the TGA reaches its typical stopping point around $900 billion [1]. This liquidity drain affects both crypto and tech markets disproportionately.

: High-growth, high-valuation technology stocks are particularly vulnerable in liquidity-constrained environments. NVDA’s 52.92x P/E and AAPL’s 36.00x P/E ratios suggest limited upside potential if liquidity conditions don’t improve [0].

: The increasing Bitcoin-Nasdaq correlation means crypto market volatility directly impacts tech stock performance, creating additional exposure for tech-focused investors [1].

: Historical patterns suggest Treasury liquidity rebuilding may be nearing completion, potentially supporting both Bitcoin and tech recovery [1]. The stabilization or decline of TGA levels from current $900+ billion could trigger market recovery.

: The approaching year-end period historically favors “Santa rallies” if liquidity conditions improve, providing potential upside for beaten-down tech stocks [1].

: Bitcoin’s technical position below its 55-day moving average may present strategic entry opportunities for both crypto and tech investors with longer time horizons, particularly when combined with strong fundamentals in major tech companies [0][1].

The analysis reveals that current Big Tech weakness is fundamentally a liquidity-driven phenomenon rather than a reflection of AI investment concerns [1]. Bitcoin’s role as a leading indicator provides valuable insight into market timing, with its current bear market status suggesting continued near-term headwinds for technology stocks. Major companies like NVDA and AAPL maintain strong fundamentals but face valuation pressure in the current environment [0]. Key monitoring factors include Treasury General Account levels, Bitcoin’s technical position relative to its 55-day moving average, and bank reserve trends [1]. The resolution of current liquidity constraints will likely determine whether tech stocks can resume their upward trajectory or face extended periods of underperformance.