Key Insights
- •US-based chip designer Nvidia's earnings release on Friday exceeded expectations. Stellar numbers and solid guidance boosted its stock (NVDA) by approximately 5%.
- •However, the euphoria was short-lived, as the stock dropped by more than 5% on the same day.
- •Meanwhile, Bitcoin ended up wiping out all of its gains for 2025.
Nvidia's (NVDA) stock dump signaled that market bubble fears are still present. Bitcoin, on the other hand, dived amid a strong pessimistic outlook. The unusual level of volatility, typically seen only in the crypto market, suggests that major market shifts may be ahead.
Nvidia (NVDA) Post-Earnings Volatility Made Crypto Look Less Risky Than Usual
Regular market commentator and pundit on X, The Kobeissi Letter, noted how the stock market swung by approximately 30% of the total crypto market cap within a single day. NVIDIA's market cap increased by around $450 billion amidst strong earnings numbers.
Such price swings are rare in the US stock market. For a moment, it seemed as though NVDA had silenced proponents of the AI-bubble theory. On November 20, the US's first Exchange Traded Fund (ETF), the SPDR S&P 500 (SPY), which tracks the S&P 500, opened 1.5% up only to close 1.5% down later in the day.
Luke Kawa of Sherwood News pointed out that such a move in the ETF had been reported only three other times in its 32-year history. The third instance was on April 8th of this year when President Trump announced a 100% spike in tariffs on China. The other two times occurred on October 7th and 9th, 2008, amid the housing market-led recession.
In terms of volatility, Bitcoin was not far behind the stock market. Its fall from $87,000 to below $81,000 dragged the crypto market downwards on Friday, November 21. Long liquidations on that day included roughly $770 million. BTC managed to close at around $85,000 that day.
US Crypto ETFs posted record activity levels on Friday. BTC Spot ETFs recorded a single-day net outflow of $903.11 million, the second-highest single-day outflow. Their total trading volume for Friday reached the $11 billion mark for the first time since their launch in January 2024.
Nvidia (NVDA) is 30% Up YTD While BTC Lost its YTD Gains
While the stock market may have experienced volatility characteristic of the crypto market, it cannot match Bitcoin's performance. Bitcoin has demonstrated significantly higher volatility than Nvidia this year, solely in terms of price performance.
At press time, BTC was trading at $86,646.94. While the US stock market is closed for the weekend, the BTC market remains open 24/7. BTC was up 2.82% intraday, but down over 9% in the last seven days. Over the past few weeks, the top crypto has wiped out its gains made since the start of the year.
In fact, BTC is down roughly 10% from its price at the start of the year. It is over 33% below its all-time high of $126,198, which was clocked days before the October 10 crypto market crash.
In the smaller time frame, Nvidia (NVDA) also shows a less favorable performance. It was priced at $178.8 at market close on Friday. Over the last five days, it was down around 4%, and year to date, it was down by 30%. Additionally, it was 13% below its all-time high. However, it is still around 30% above its price at the start of the year.
Nvidia leads the AI narrative globally, not just in the US. This was not the first time it beat its earnings estimates. In one of TCR’s recent stories, Arnold explained how AI had broken the
Why is There Volatility?
Despite strong numbers for Nvidia, AI-bubble fears persist. Dr. Michael Burry, known for "The Big Short," holds over $1 billion in short positions on AI stocks, including Nvidia (NVDA). Burry maintains that major AI-promoting companies are inflating their earnings. Meanwhile, after Thursday's crypto market drawdown, the crypto market was left searching for answers.
Some analysts suggested that Morgan Stanley Capital International's (MSCI) October 10 proposal to delist companies like Strategy from its indices was the root cause of the present slump. MSCI's proposal will be confirmed by January 15, when it will announce its final decision regarding its treatment of digital asset treasuries (DATs) like Strategy.
Lastly, it is important to note that bubble fears and policy changes are amplified by macroeconomic changes. During these drawdowns, the markets were also trying to price in central bank policy rate changes amid all the AI-bubble speculation and Strategy’s delisting drama.
The odds of a Fed December rate cut are gradually dropping. Still, there is no consensus that a rate cut is completely ruled out.