Strong Correlation Between Bitcoin and Nvidia, and Concerns About the AI Bubble

The correlation between Bitcoin (BTC) and chip maker Nvidia has risen above 0.80 in the 90-day and 52-week periods, indicating a strong relationship between the two assets. The correlation is attributed to Nvidia’s valuation increasing due to demand from artificial intelligence projects and parallels drawn with the rise of Bitcoin. Both assets have seen significant gains since the beginning of the year. Correlation Growth and Market Values In the past five years, the market values of Bitcoin and Nvidia have increased significantly. Bitcoin’s market value rose from $70 billion to $1.43 trillion, while Nvidia’s market value rose from $100 billion to $2 trillion. Nvidia’s growth has been influenced by demand from artificial intelligence applications such as ChatGPT. AI Frenzy and Bubble Risk Some market observers and investment firms warn that the excitement over Nvidia’s valuation increase in artificial intelligence could be a bubble. Jeremy Grantham, Chief Investment Strategist of GMO, […]

Strong Correlation Between Bitcoin and Nvidia, and Concerns About the AI Bubble

The correlation between Bitcoin (BTC) and chip maker Nvidia has risen above 0.80 in the 90-day and 52-week periods, indicating a strong relationship between the two assets. The correlation is attributed to Nvidia’s valuation increasing due to demand from artificial intelligence projects and parallels drawn with the rise of Bitcoin. Both assets have seen significant gains since the beginning of the year.

Correlation Growth and Market Values

In the past five years, the market values of Bitcoin and Nvidia have increased significantly. Bitcoin’s market value rose from $70 billion to $1.43 trillion, while Nvidia’s market value rose from $100 billion to $2 trillion. Nvidia’s growth has been influenced by demand from artificial intelligence applications such as ChatGPT.

AI Frenzy and Bubble Risk

Some market observers and investment firms warn that the excitement over Nvidia’s valuation increase in artificial intelligence could be a bubble. Jeremy Grantham, Chief Investment Strategist of GMO, suggests that the rise in artificial intelligence stocks could be a “bubble within a bubble,” citing similar hype periods in previous technological revolutions.

Despite these concerns, Citi strategists predict that the AI bubble will continue to grow until 2025. This highlights the balance between the hype in the AI sector and the long-term value and future uncertainties of these assets.

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