Bitcoin experienced significant fluctuations following Nvidia’s earnings announcement on Wednesday, reflecting broader market trends. After Nvidia reported stronger-than-expected results for its fourth quarter, its stock briefly rose by 1%, which contributed to a surge in Bitcoin’s price, pushing it above the $70,000 mark for the first time in weeks.
However, by Thursday morning, the optimism dissipated as Bitcoin plummeted to approximately $66,000, coinciding with a nearly 5% drop in Nvidia’s stock. This decline dragged the S&P 500 and other major indexes down, underscoring investors’ concerns about a potential bubble in artificial intelligence infrastructure, despite Nvidia’s robust earnings report.
“Risk appetite remains the dominant headwind across asset classes,” noted Matt Howells-Barby, Vice President at Kraken. He emphasized that the tepid market reaction to Nvidia’s earnings reflects a cautious sentiment. “Any additional negative catalysts could weigh further on risk assets, including crypto,” he added.
This correlation between Bitcoin and traditional equities has sparked discussion on its role as a risk asset. Recent trends indicate that Bitcoin has not behaved as a safe haven during market downturns. Over the past month, as the S&P 500 fell by 1%, Bitcoin’s value deteriorated by an alarming 25%.
The cryptocurrency market has been enduring a rough period since reaching its all-time high of $126,000 last October, bolstered by former President Donald Trump’s more favorable stance towards the technology. Since then, many cryptocurrencies have also suffered steep declines. Ethereum has fallen by 33% over the last three months, landing at around $2,000, while Solana has seen a 40% decrease, now valued at approximately $85, according to data from Binance.
Experts predict that Bitcoin will continue to exhibit significant volatility. “The signal going forward: Bitcoin is in a volatility regime,” stated Boris Alergant, head of strategic initiatives at Babylon Labs. He explained that without normalized market-making depth, Bitcoin will remain highly reactive to exchange-traded fund (ETF) flows, macroeconomic indicators, and specific news events, leading to larger price swings in both directions.
