10.04.2024

Experts say BTC correlates with NVDA and the AI bubble

The Bitcoin (BTC) exchange rate continues to move in sync with Nvidia’s (NVDA) stock price. Some analysts are questioning the sharp rise in valuations of the Nasdaq-listed chip maker. The launch of ChatGPT in December 2022 has helped raise the general public’s awareness of artificial intelligence.

“The affair with AI stocks represents a ‘bubble within a bubble’ that could start to deflate,” explained GMO chief investment strategist Jeremy Grantham. “Every technological revolution like this one, from the Internet to telephones, railroads or canals, has been accompanied by early mass hype and a stock market bubble,” the specialist noted.

The leading cryptocurrency by market value has pulled back more than 8 percent from Thursday’s record high of $73,800. However, according to the data, prices are up 60% since the beginning of this year. Nvidia shares, on the other hand, are down 9% from their all-time peak of $974. Meanwhile, the year-to-date gain is 77.5%.

In 5 years, the market capitalization of BTC has jumped from $70 billion to $1.43 trillion. Similarly, the total value of NVDA has grown from $100 billion to more than $2 trillion, or rather stopped at $2.19 trillion, second only to Apple and Microsoft.

The growing demand for Nvidia processors from ChatGPT and other generative artificial intelligence (AI) projects is primarily responsible for the surge in valuations for chip makers. According to the TradingView platform, the 90-day correlation coefficient between BTC and NVIDIA rose to 0.86, the highest level since May 2023, and turned positive in November.

As for the 52-week correlation, it has been consistently positive since July 2020 and has now risen to 0.88, the highest level since January 2023. A coefficient of more than 0.8 indicates that BTC and NVDA are highly correlated and tend to move in the same direction.

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Коля Мельниченко

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