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Nvidia Bitcoin Correlation – Could BTC Survive NVDA Crash?

Published April 22, 2024 2:26 PM
Giuseppe Ciccomascolo
Published April 22, 2024 2:26 PM

Key Takeaways

  • Nvidia’s stock price has grown a staggering 180% over the past two years.
  • The AI stock significantly outperformed Bitcoin’s meager 8% increase.
  • Nvidia’s AI and GPU technologies provide the backbone for AI-powered trading platforms and efficient cryptocurrency mining.

While cryptocurrencies have grabbed headlines, traditional investments like Nvidia‘s stock have quietly delivered staggering returns. This surprising trend extends beyond Nvidia, with other companies experiencing significant growth.

But crypto isn’t entirely out of the picture. And there’s an interesting synergy between artificial intelligence (AI) and digital assets, in which both Nvidia and Bitcoin can stand at the forefront.

Nvidia’s Investors Favored Option

Nvidia’s stock has outperformed Bitcoin as an investment, witnessing a remarkable surge in value compared to the digital currency. Its shares skyrocketed by 180%, soaring from $293.71 in 2021 to $822.79 in 2024, according  to Banking Methods’ analysis tracking price increases among stocks and cryptocurrencies.

In contrast, despite the widespread interest in cryptocurrencies, Bitcoin only saw an 8.3% increase in value during the same period, climbing from $67,527.90 to $73,103.58. This performance relegated Bitcoin to eleventh place, failing to secure a spot among the top ten investments, contrary to its usual hype in the investment landscape.

Most favored assets
Most favored assets by investors. l Source: Banking Methods

Following Nvidia’s lead, BAE Systems claimed the second position on the list, with its stock price surging by 117% from $601.60 in 2021 to $1,304.00 in 2024. This upward trajectory mirrors the escalating demand within the defense and information security sectors.

Meta, formerly known as Facebook, secured the third spot, with its shares appreciating from $335.99 to $502.30, marking a notable 49.5% rise. This significant growth underscores the company’s robust position in the ever-evolving tech market.

Bitcoin Still Leads Among Cryptocurrencies

Bitcoin remains the quintessential reference point in the realm of digital currency despite not making it to the top ten overall investments. Bankrate survey  showed Bitcoin’s as the top choice among crypto investors. Its enigmatic creator, purportedly Satoshi Nakamoto, introduced the currency in 2009, setting off a turbulent journey ever since. However, it wasn’t until 2017 that Bitcoin truly penetrated popular consciousness. Fast forward to 2024, the SEC greenlit the trading of ETFs directly investing in Bitcoin, simplifying investors’ access to the cryptocurrency.

Ethereum, the prominent cryptocurrency platform, is the second most recognizable name in the crypto landscape. Its versatile system facilitates various functions using ether the currency, with Ethereum’s smart contract capability significantly contributing to its popularity.

Tether, with its stable price pegged at $1 per coin, operates as a stablecoin, firmly linked to the value of the US dollar. Tether’s utility is significant as a bridge currency for traders transitioning between cryptocurrencies. However, concerns linger regarding its backing, as it relies on short-term unsecured debt rather than securely held dollars. It ranks third among the most-traded crypto.

BNB, the cryptocurrency issued by Binance, one of the globe’s largest crypto exchanges, follows as fourth. Initially designed as a token for discounted trades, it has evolved into a versatile asset. Beyond its original purpose, Binance Coin is now accepted for payments and acquiring various goods and services, showcasing its expanding utility within the crypto ecosystem.

Correlation Between Nvidia And Crypto

The fusion of AI and cryptocurrency represents a major milestone in finance, ushering in a more sophisticated, secure, and efficient era of trading and investment. Machine learning algorithms are revolutionizing crypto markets, automating trades and providing predictive insights, empowering traders with enhanced decision-making abilities, risk management tools, and the precision to capitalize on lucrative opportunities.

Moreover, AI-powered analytics platforms amplify cryptocurrency transactions’ transparency and integrity. By scrutinizing transaction patterns and identifying irregularities, AI serves as a bulwark against potential fraud and security breaches. Thus instilling trust in cryptocurrency transactions. Nvidia stands at the forefront of this transformation. It leverages its state-of-the-art AI and GPU technologies to furnish the requisite hardware and software solutions driving these innovations forward.

The integration of AI transcends trading and the security space, extending its reach into cryptocurrency mining operations. Nvidia’s GPUs, finely tuned for AI tasks, are exceptionally well-suited for mining endeavors. They offer unparalleled efficiency and computational prowess unattainable by conventional processors. This duality underscores the symbiotic relationship between AI and cryptocurrency. Nvidia’s groundbreaking achievements are poised to propel both domains toward exponential growth trajectories.

Delving deeper into cryptocurrency mining, Nvidia’s influence reigns supreme in a sector reliant on robust computational power and energy efficiency. Nvidia’s GPUs empower miners to process transactions and tackle cryptographic challenges swiftly with unparalleled agility. This efficiency not only augments the profitability of mining ventures. But also fortifies the resilience and security of blockchain networks on a global scale.

Could Bitcoin Survive An Nvidia Crash?

As evidenced by historical data, there exists a discernible correlation between the performance of Bitcoin and Nvidia, prompting speculation regarding Bitcoin’s resilience in the event of a potential crash in Nvidia stock. Given Bitcoin’s prominent position in the technology sector, particularly in recent years, where it has closely tracked the Nasdaq, it’s evident that both the technology – AI – and crypto sectors have been standout performers, surpassing other sectors in terms of growth. Consequently, any turbulence in the stock market is likely to exert some influence on Bitcoin’s trajectory.

While it’s plausible that a downturn in Nvidia ($NVDA) stock could ripple into the Nasdaq and broader stock market, it’s equally important to recognize that Bitcoin may not be impervious to such market fluctuations. However, viewing any resultant volatility as a healthy correction within the market’s natural ebb and flow is crucial, especially for long-term investors who understand that challenges are an inherent aspect of the investment landscape.

In summary, the intricate relationship between Nvidia’s performance and Bitcoin’s resilience presents a multifaceted scenario. As the crypto market navigates through periods of volatility, maintaining a vigilant and strategic investment approach is paramount. Each market twist and turn presents an opportunity for growth and adaptation, underscoring the importance of resilience and flexibility in the face of uncertainty.

BTC/NVDA chart
BTC/NVDA chart over the last 10 years. l Source: StatMuse

Examining the BTC/NVDA chart reveals a potential silver lining for Bitcoin amid the cloud of uncertainty surrounding Nvidia’s performance. Despite the challenges posed by Nvidia’s fluctuations, the chart paints a promising picture for Bitcoin’s future, suggesting a possible upswing as Bitcoin navigates alongside one of the market’s top-performing stocks.

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