AI-linked crypto tokens have faced a decline amidst Nvidia's soaring stock prices. Crypto traders predict the downturn won't lastanticipating a rebound linked to Nvidia's future performance.
Artificial intelligence (AI)-linked crypto tokens have seen a decline over the past 24 hours, despite Nvidia’s (NVDA) share price surging over 7% on May 28. Crypto trader Matthew Hyland suggests that this downturn is temporary. In a May 28 post on X (formerly Twitter), Hyland remarked, “NVDA surging; AI coins are quiet now but don’t expect that to last.”
Nvidia, a leading producer of computer chips essential for AI operations, has experienced a significant stock price surge, closing at a record high of $1,140 on May 28. The stock has shown remarkable growth, with a year-to-date increase of nearly 137%, according to Google Finance. Nvidia’s first-quarter revenue saw an 18% increase from Q4 2023 and a 262% jump from the same quarter last year, reaching $26 billion and surpassing analyst estimates by about 5.6%.
Diverging Trends: Nvidia’s Surge vs. AI Crypto Tokens Decline
Despite Nvidia's impressive performance, major AI crypto tokens like Render (RNDR), Fetch.ai (FET), and SingularityNET (AGIX) have not mirrored this uptrend. Over the past seven days, these tokens have declined by 8.14%, 11.39%, and 11.19%, respectively, as reported by CoinMarketCap.
Crypto traders, however, believe this divergence is only temporary. Hyland and other traders suggest that the AI token market is poised for a rebound, especially if Nvidia's stock experiences a downtrend. Pseudonymous trader Triplexx emphasized this point, stating in a May 28 post, “The moment NVDA starts to sell off, it will take all the other mega-cap tech names with it, at least for a couple of days. Then, whatever the sentiment in crypto is, it will pull crypto with it no matter what. Be prepared.”
Long-Term Outlook: Nvidia vs. Bitcoin
While Nvidia’s stock has outperformed Bitcoin over the past decade, investment strategist Lyn Alden and others in the crypto community believe that Bitcoin will outperform Nvidia over the next ten years. On May 25, Alden noted Nvidia's exceptional performance compared to Bitcoin in the last decade. The following day, The Kobeissi Letter highlighted the long-term gains of Nvidia, stating a $10,000 investment in Nvidia in 1999 would be worth $25.3 million as of May 24.
Despite Nvidia's impressive historical performance, Swan Bitcoin CEO Cory Klippsten argued that Bitcoin is likely to outperform Nvidia in the coming decade. He claimed there is a “near zero chance of Nvidia outperforming Bitcoin over the next 10 years.”
Broader Market Sentiments and Future Implications
The current situation reflects the broader dynamics between traditional tech stocks and emerging crypto markets. Nvidia’s stock performance is often seen as a barometer for the AI sector, influencing market sentiment around AI-linked crypto tokens. As Nvidia continues to innovate and expand its role in the AI industry, its stock movements are expected to have a corresponding impact on AI crypto tokens.
The recent decline in AI tokens amid Nvidia’s surge might seem contradictory at first glance, but it underscores the complex and interconnected nature of market sentiments. Traders and investors are advised to stay alert to shifts in Nvidia’s performance, as these are likely to signal broader trends in the AI crypto market.
AI-linked crypto tokens are currently experiencing a downturn, juxtaposed against Nvidia’s soaring stock prices. However, seasoned traders like Matthew Hyland and Triplexx predict this trend will reverse, especially if Nvidia's stock enters a downtrend. The long-term debate continues over whether Nvidia or Bitcoin will provide better returns in the next decade, with strong arguments on both sides. As the market evolves, staying informed and prepared for rapid changes will be crucial for investors and traders alike.
(CIARAN LYONS, COINTELEGRAPH, 2024)