On Crypto Insiders you mainly read about cryptocurrencies and blockchains, but… The sector is closely linked to other important issues in the world. These days, Nvidia isn’t the first name that comes to mind when you think of Bitcoin (BTC), but this chip giant’s stock suggests otherwise. The correlation between the two hasn’t been as high as it is now for over a year, and that could be worrying.
Bitcoin and Nvidia are in sync
CoinDesk writes this based on its own indicators. The 90-day and 52-week correlation between Bitcoin and Nvidia stock (ticker symbol: NVDA) has risen to over 80 percent. This means that the prices of the two assets are 80 percent the same.
The value of Bitcoin has risen sharply since last September – by around 200 percent. The trend has been most explosive since the end of January, when the price rose by around 90 percent. NVDA is slightly less volatile and has therefore risen less quickly over the same period. Nevertheless, Nvidia shares have gained almost 150 percent in value since the end of October. So that’s not much less than Bitcoin.
This fact is not necessarily positive, said Jeremy Grantham, chief investment strategist at asset manager GMO. He describes the AI stock boom as a “bubble within a bubble” that could burst at any time. AI would also have created a bubble for the rest of the stock market through companies like Nvidia.
Nvidia popular because of AI
NVDA has also risen at its fastest pace since the beginning of this year. According to analysts, this is because the company has been able to make huge gains from the artificial intelligence (AI) trend as AI companies have purchased huge server hardware from Nvidia to process their AI tasks.
The company then announced record profits last February. AI is also no stranger to the crypto industry. There are several AI tokens that all surged shortly after these quarterly numbers were released.
Ironically, a year ago Nvidia no longer wanted to have anything to do with crypto, at least not with crypto mining. Mining hardware used to be manufactured there, but now it has stopped.
With a market value of around $2.2 trillion, Nvidia is one of the largest companies in the world and certainly one of the largest hardware companies in the world. That makes it even more valuable than Bitcoin, whose market value peaked at around $1.45 trillion last week.