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The AI narrative is back with a bang, and as Bitcoin (BTC) surges to a new all-time high ahead of Nvidia GTC 2024 event – is BTC now trading in correlation with Nvidia (NVDA)?
So far, 2024 has seen a return to risk-on sentiment amongst investors, with a bullish return to cryptocurrency and big tech stocks being buoyed by the institutionalization of Bitcoin and hype around AI.
Indeed, recent weeks have seen major strides for both industries, with Sam Altman’s OpenAI revealing a paradigm-altering AI video generator in SoraAI ahead of the highly anticipated Nvidia GTC 2024 event.
Meanwhile, Bitcoin has been hammering new all-time highs amid multi-billion dollar inflows, most recently at $73,737 on March 14, in a historical break with precedent (Bitcoin’s first-ever pre-Halving event all-time high).
The confluence of these events; surging interest in both Bitcoin and AI technology has given rise to a so-called ‘AI narrative’ in the crypto market, which has fuelled pumps for several AI-linked cryptocurrencies such as Fetch.Ai (FET) and Render (RNDR).
Crypto traders now stand poised, awaiting the beginning of the Nvidia GTC 2024 conference next week – with bags ready to ‘sell the news’.
Nvidia GTC 2024 Fuels Market Pumps: Bitcoin Displays Strong Correlation With Nvidia Ahead of Key Conference
Following an aggressive ascent to a new all-time high, this morning has seen BTC in retreat -trading at a -8% retracement down to $67,368 (still at a 62.54% YTD gain).
Simultaneously, NDVA has also pulled back -9% in a retracement move to $879 from it’s own all-time high (still at a 82.58% YTD gain).
While Bitcoin’s surge has been fuelled predominantly by miner accumulation pre-halving and institutional inflows, Nvidia’s growing demand stems from the increased demand for Nvidia processors, which provide GPU capacity for the rapidly expanding AI industry.
(BTC – Candles, NVDA – Orange)
Prominent crypto analysts have also highlighted a growing trend in the 90-day correlation coefficient, which now stands at 0.86 – the highest level in 10-months.
It seems likely that the continued correlation between Nvidia stock and Bitcoin price is more closely related to risk-on sentiment than any tangible links between BTC and NVDA, potentially revealing that Bitcoin, especially spot Bitcoin ETFs, are being treated as big tech by equities markets.
This is further confirmed by bullish movements for Bitcoin mining stocks and firms such as Michael Saylor’s MicroStrategy.
But Is This an AI Bubble And Will It Pop Like The Dot Com Boom?
With AI cryptocurrencies and AI-linked stocks surging to new all-time highs, many are beginning to question whether this could be the start of the next big tech bubble – similar to the dot com boom in the 1990s – which saw a massive over-valuation of new internet stocks as part of a bubble which eventually popped to seismic effect.
Speaking to Investing, Citi analyst Christopher Danely confirmed the worst – but suggested that there is still a window of opportunity for investors.
“This is one of the rare times it’s different … [it’s] shaping up to be a repeat of 1999,” explained Danely.
“… But it could last into 2025 …We would note that these bubbles can last a year or longer, similar to what happened in 1999 with the tech bubble.
“… And while it ended badly – and this will likely end badly as well – valuations can remain frothy for over a year, as long as estimates keep going up rapidly.”
EXPLORE: How to Buy Spot Bitcoin ETF – For Beginners
Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
