Did Nvidia's Positive Earnings Cause the Crypto Market Bounce?

Key Takeaways

Nvidia (NVDA), the largest company in the U.S., reported its earnings today.
NVDA’s price movement is heavily correlated with both the stock and crypto markets.
Was Nvidia the cause of the bounce across Bitcoin and the rest of the crypto market?

Nvidia’s earnings date has become one of the most influential events in global markets.

It can move everything from the S&P 500 (SPX) to Bitcoin (BTC) and the broader cryptocurrency market.

As the largest company in the United States, NVDA is at the center of the AI boom and the broader risk-asset cycle.

NVDA beat its earnings today, resulting in a significant upward movement across the cryptocurrency markets.

With that in mind, let’s examine a few charts to determine the exact correlation between NVDA, the cryptocurrency, and the stock markets.

Crypto Market Bounces After Nvidia Earnings

Nvidia reported its earnings after the market closed yesterday.

Its sales grew 62% year-over-year, reaching $57 billion and beating the $54.9 billion Wall Street had projected.

Its stock price jumped in the after-hours shortly after the report and currently trades at $171.

The earnings call also triggered a crypto market bounce, since TOTALCAP rallied by 4% right after the earnings report.

Hence, the price movement confirmed the correlation between the two, which has been ongoing for more than a year.

*Note: The rest of the article was published on Nov. 19, before Nvidia reported its earnings.

Nvidia’s Earnings

The importance of Nvidia’s earnings cannot be overstated, as the company is the largest listed on the S&P 500 with a market capitalization of $4.6 trillion.

The implied move in earnings on the stock price is 7.5%, which amounts to more than $345 billion, a number higher than the market capitalizations of all but 33 public companies worldwide.

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NVDA Price Shows Top Signals

The NVDA price has increased rapidly since its low of $10.81 in October. Until its all-time high of $211 last week, the cost of Nvidia surged by nearly 1,600%, outperforming everything else in the market.

However, signs of weakness are finally starting to show. This is especially evident in the weekly Relative Strength Index (RSI) and Moving Average Convergence/Divergence (MACD), which have created bearish divergences (indicated by the orange lines).

Nvidia Weekly — NVDA Weekly Chart | Credit: Valdrin Tahiri/TradingView

These divergences in the weekly time frame are rare, and they have often marked the beginning of a long-term bearish trend reversal.

If the divergences materialize, the NVDA price could decline by 18% to the closest horizontal support at $150.

Nvidia and Crypto

The NVDA stock price has been closely correlated with Bitcoin and the broader crypto market since the start of 2024.

In fact, the Bitcoin (black) and crypto market (blue) charts are almost mirror images of the price of NVDA since the start of 2024.

Nvidia Crypto — Custom Weekly Chart | Credit: Valdrin Tahiri/TradingView

NVDA has outperformed both Bitcoin and the broader cryptocurrency market.

It posted a 266% increase compared to 116% for Bitcoin and only 93% for the rest of the crypto market.

Nevertheless, the chart shows that the NVDA earnings could indirectly affect the Bitcoin price and the rest of the crypto market, since an upward or downward movement in the NVDA price is likely to cause the same in crypto.

Nvidia and Stocks

The relationship between the NVDA price and the stock market is virtually identical to that between NVDA and other cryptocurrencies, such as Bitcoin.

This relationship is even more intuitive since NVDA stock is actually part of the S&P 500 and NASDAQ, so the price movement of its stock directly affects the indices, rather than indirectly affecting them, as is the case with Bitcoin and crypto.

Correlation — Custom Weekly Chart | Credit: Valdrin Tahiri/TradingView

However, it is worth mentioning that the effect it has on the index price is much more subdued compared to that in crypto, since the indices are less volatile.

Nevertheless, Nvidia’s earnings today are likely to affect the stock market similarly to how they impact the cryptocurrency market.

Artificial Intelligence Stocks

Artificial Intelligence stocks have been in high demand over the past few years, particularly since the launch of ChatGPT.

In fact, an argument can be made that the recent boom in AI investment acted as an unexpected, highly concentrated economic stimulant.

It held up GDP, earnings, and equity indices. That continued even as the broader economy and most businesses softened.

This delayed the normal credit and business cycle that would have required the Federal Reserve to ease.

However, because this surge isn’t as broad or democratized as traditional monetary stimulus, it has likely only extended the cycle rather than eliminated it.

Possible Bottom — CRWV Weekly Chart | Credit: Valdrin Tahiri/ TradingView

There are a couple of Artificial Intelligence stocks that are currently in interesting positions.

Famed German AI investor Leopold Aschenbrenner has invested $600 million in CoreWeave (CRWV) and $400 million in Core Scientific, both companies that specialize in GPUs and Data Centers.

The CRWV price is already down 60% from its high, but has created an A-B-C structure that could mean the correction has ended.

Hence, if Aschenbrenner is right again, he could potentially be entering at the absolute bottom of an AI stock that might outperform in the future.

Similar to the rest of the stock and cryptocurrency markets, Nvidia’s earnings could significantly impact the performance of these two stocks.

Nvidia’s Earnings Were Crucial

Nvidia’s earnings revealed the strength of the AI economy, which also led to a sharp upward movement in the cryptocurrency market.

The higher-than-expected earnings temporarily placated the fears of an AI bubble and crash, though they were not enough to lift crypto out of its bear market.

Nvidia (NVDA) Beats Earnings Leading to Crypto Market Bounce