Nvidia's Death Cross: Impact on AI Crypto?
Nvidia's Bearish Signal and AI Crypto
Nvidia (NVDA), a major player in the chip-making industry, recently experienced a significant bearish signal – a "death cross." This pattern, which occurs when the 50-day simple moving average (SMA) falls below the 200-day SMA, historically precedes substantial price drops. The last time NVDA saw this pattern (April 2022), its stock price retraced nearly 50% over the following six months. This raises questions about the potential impact on the closely watched AI crypto sector.
While the death cross formed before the trading week ended on March 21st, some AI crypto tokens have shown resilience. Render (RENDER) is up 4.06%, while Bittensor (TAO) and Fetch.ai (FET) are up around 2.88%, according to CoinMarketCap data. This suggests a potential decoupling, at least for now.
Correlation or Coincidence?
The relationship between Nvidia's stock performance and AI crypto token prices has been complex. While some surges in AI crypto tokens have coincided with positive NVDA news, such as its nearly 70% rally before its Q2 2024 earnings, other times show no clear correlation. For example, after Nvidia’s Q1 2024 revenue jumped 18% from Q4 2023, some AI token traders were disappointed by the lack of a similar price increase in AI crypto tokens.
This lack of consistent correlation highlights the importance of fundamental analysis in evaluating individual projects, rather than solely relying on Nvidia's performance as a leading indicator. The recent drop in the market capitalization of top AI and big data crypto tokens by 23.70% over the past month further emphasizes this point. NEAR Protocol (NEAR), for instance, has seen a 59% retracement over the past year.
The Future of AI Crypto
Despite recent market volatility, a CoinGecko survey revealed that nearly half of crypto experts remain bullish on AI crypto tokens. 25% were “fully bullish,” and 19.3% were “somewhat bullish” for 2025, based on responses from 2,632 participants. However, this optimism is tempered by comments from industry figures like Changpeng Zhao ("CZ"), the former Binance CEO, who advises focusing on utility and real-world applications rather than simply launching new tokens.
Ultimately, the impact of Nvidia's death cross on AI crypto remains uncertain. While short-term correlations might exist, long-term success will depend on the intrinsic value and utility of individual projects. Codeum, a blockchain security and development platform, offers various services to help projects build securely and transparently, including smart contract audits, KYC verification, custom smart contract and DApp development, and tokenomics and security consultation. Partnering with Codeum can help build trust and strengthen the foundation of your project.