Bitcoin, the leading cryptocurrency by market cap, surged sharply higher on Tuesday, erasing a portion of its devastating losses.
This came after tech giant Nvidia reported higher-than-expected earnings.
The blowout earnings have alleviated concerns about the artificial intelligence (AI) bubble popping in the near future, like the dot-com bubble.
Nvidia’s data-centre business delivered extremely impressive revenue of roughly $51.2 billion.
The AI ecosystem is scaling, with more startups and industries. Nvidia has become a key supplier in the AI/compute "arms race," becoming the most valuable company in the world.
The tech giant is seen as a bellwether for the broader AI infrastructure cycle, and strong results from them help restore investor confidence in the AI build-out.
Why this matters for Bitcoin
Even though Bitcoin and Nvidia are different asset classes, markets increasingly treat them as part of one macro-theme. Hence, Nvidia’s blowout earnings acted as a risk-on catalyst.
Bitcoin trades as a high-beta risk asset, especially in macro-driven contexts. So Nvidia’s success essentially means that the macro environment is not collapsing since the AI boom is still intact.
According to VanEck's Matthew Sigel, more GPU demand also means that there will be fewer BTC sales among miners. Hence, this will result in upward price pressure for the leading cryptocurrency.
Not out of the woods
That said, according to popular pseudonymous trader DontAlt, the leading cryptocurrency is not out of the woods just yet.
The popular cryptocurrency chartist claims that the flagship cryptocurrency would first need to reclaim the $94,000 in order to rescue the weekly candle.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team