On January 27, Nvidia’s shares plummeted by 17%, wiping out $600 billion in market value. This marked the largest one-day loss in U.S. stock market history. The decline was triggered by concerns over a new AI model from the Chinese company DeepSeek, which now competes with OpenAI’s ChatGPT.
However, there’s an interesting twist—this drop in Nvidia’s value could actually give Bitcoin a boost.
How exactly could Nvidia’s decline impact the crypto market? Keep reading to find out.
While Nvidia’s sharp drop shocked the tech world, analysts believe Bitcoin could see some upside. According to a report from 10x Research, Nvidia’s fall in valuation could actually benefit Bitcoin, especially with the upcoming IPOs of major crypto companies.
The report suggests that lower AI spending could help reduce inflation, which might lead the U.S. Federal Reserve to adopt more favorable monetary policies. As the report points out:
“Reducing AI spending keeps share buybacks as a key driver of U.S. equity returns and eases inflationary pressures, addressing the Fed’s concerns and making them marginally less hawkish.”
The report also highlights another important factor for Bitcoin: the upcoming IPOs of several top crypto firms. With nearly $100 billion in IPOs expected, Bitcoin could see a rise as these companies go public. The launch of these IPOs creates a strong incentive to keep Bitcoin prices high, especially to support inflated valuations.
At least 10 major crypto companies plan to go public in 2025, with a combined valuation expected to top $73.9 billion. The report explains that Bitcoin’s price is often influenced by efforts to boost or manipulate its value, as seen before Coinbase’s IPO in 2021.
The research also suggests that the IPOs could raise valuations by 50% to 100% compared to previous funding rounds, potentially pushing the total valuation of these firms to $100 billion or even $150 billion.
This increase in valuation could provide a strong incentive to keep Bitcoin’s rally going throughout 2025, as higher crypto asset prices are crucial for achieving these inflated IPO targets.
“This substantial value provides a strong incentive to sustain Bitcoin’s rally throughout 2025, as higher crypto asset prices are critical for achieving these inflated IPO valuations,” it noted.
However, the $36 trillion US debt ceiling has raised concerns about Bitcoin liquidity, which could pDespite the positive outlook, there are concerns about Bitcoin’s short-term growth due to liquidity issues. The $36 trillion U.S. debt ceiling could affect Bitcoin’s liquidity, leading to a potential correction to around $70,000 before a new rally begins.
Raoul Pal, founder of Global Macro Investor, predicts that Bitcoin could reach a “local top” above $110,000 in January. However, due to a temporary dip in liquidity, he expects Bitcoin to fall below $70,000 by February. His analysis is based on Bitcoin’s correlation with the global liquidity index.
Bitcoin’s path forward could hold some unexpected turns, especially as the market braces for what’s next.
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