Bitcoin (BTC) is closely tracking Nvidia (NVDA) shares, prompting scrutiny from analysts regarding the surging valuations of the Nasdaq-listed chipmaker. Despite pulling back over 8% from its record high of $73,798, BTC still boasts a 60% year-to-date increase, according to CoinDesk data. Similarly, Nvidia has retreated 9% from its all-time peak of $974 but maintains a year-to-date gain of 77.5%.
Over the past five years, bitcoin's market capitalization has skyrocketed from $70 billion to $1.43 trillion, mirroring Nvidia's market value surge from around $100 billion to over $2 trillion. The rising demand for Nvidia processors, particularly from ChatGPT and other generative AI projects, has been a significant driver behind the chipmaker's soaring valuations.
The 90-day correlation coefficient between BTC and NVDA has climbed to 0.86, the highest since May 2023, indicating a strong positive correlation since November. Furthermore, the 52-week correlation has consistently been positive since July 2020, reaching 0.88, the highest since January 2023.
This statistical relationship is noteworthy, with some market observers, including investment management firm GMO, expressing concerns that the AI frenzy mirrors the dot-com bubble burst in 2000. GMO's Chief Investment Strategist Jeremy Grantham highlighted that the launch of ChatGPT in December 2022 sparked general awareness about AI, leading to an investment surge in AI stocks, which he views as a "bubble within a bubble" that could deflate.
Grantham emphasized that while technological revolutions like AI hold transformative potential, they often undergo periods of hype followed by disappointment before realizing their long-term promise. This sentiment underscores the cautious outlook surrounding the current surge in both bitcoin and AI-related stocks.
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