Nvidia stumbles, Bitcoin slumps, but Q4 whispers of crypto riches to come.
TL;DR…
- Nvidia hit by DOJ antitrust subpoena: NVDA shares dropped 9.5%, wiping out $279B in market cap, marking its largest single-day loss ever.
- AI tokens react to Nvidia news: Top AI tokens dipped initially but are bouncing back, with crypto AI outperforming general markets, up 0.57% in the last day.
- Bitcoin struggles in September: BTC is down 2.7% so far, aligning with historical trends, dragging down AI tokens and the altcoin market with it.
- Q4 crypto optimism: Data shows Bitcoin and altcoins typically thrive in Q4, with upcoming rate cuts potentially fueling the market recovery.
This week saw Nvidia face a massive stock drop after a DOJ antitrust subpoena, sending temporary shockwaves through the AI token sector.
Bitcoin continues its September slump, while Q4 offers hope for recovery.
Here's a quick look at the key events shaping the market this week.
The Big News: The DOJ Subpoenas Nvidia
According to recent reports, the U.S. chip manufacturing giant Nvidia received a subpoena from the U.S. Department of Justice as the chipmaker is probed for potential antitrust violations.
In response, NVDA suffered the largest single-day decline in market capitalization in its history — with $279 billion slashed following a 9.5% dump.
Many spectators called foul play on X, with some believing that significant insider trading took place given that the majority of the decline took place before Bloomberg broke the news.
NVDA stock has since reclaimed some of this loss and is up 1.04% today.
As has become commonplace recently, AI tokens immediately reacted to the news and dumped accordingly.
7 of the top 10 largest AI tokens are in the green over the last 24 hours, though pureplay AI projects like Bittensor (TAO) and Artificial Super Intelligence (FET) are still struggling with a -1.3% and +0.1% performance in the last day respectively.
The crypto AI segment is up an average of 0.57% in the last day and 16.37% in the last month. This is significantly better than the market average of +0.43% and 6.29% respectively.
Keep tabs on your favorite AI and big data tokens here.
Top Stories This Week
While the DOJ's investigation into Nvidia may be the headline story in the AI space, a range of other noteworthy news and developments are also garnering attention.
We’ve handpicked the most relevant for you:
- OpenAI to raise more capital: According to The Wall Street Journal, the AI giant is in talks with investors to raise several billion dollars at a valuation of $103 billion — indicating it is burning through resources amid rising model training costs.
- Coinbase announces first AI-to-AI transaction: Coinbase CEO Brian Armstrong has revealed on X that two AI agents operating on the Base blockchain have now transacted with one another.
- Nvidia earnings report beats estimations: Nvidia reported Q2 FY2025 revenue of $30.04 billion and earnings per share of $0.68 — up 122% year-over-year and smashing almost all analyst expectations. It expects to pull in $32.5 billion in Q3, continuing four quarters of revenue growth.
- io.net and Flock partner on new AI-centric consensus mechanism: The "Proof of AI" (PoAI) consensus mechanism aims to enhance the integrity and scalability of decentralized AI networks and ensures that contributors are rewarded for genuine computational work while deterring false participation.
Rektember Strikes Again
The crypto market has shown strong seasonality in recent years, with Q3 typically being one of the worst quarters for Bitcoin growth.
Zooming in we find that September is generally the worst month of the year for Bitcoin, with a median return of -4.64% over the last 12 years, per data from Coinglass.
So far, this pattern has held in 2024. Bitcoin is currently down 2.7% in September but is demonstrating choppy price action with no clear direction.
Given that the altcoin market, and in turn the crypto AI market is largely contingent on the performance of Bitcoin, it is unsurprising to see adverse price action practically across the board.
This is confirmed by strong outflows from the U.S. BTC Spot ETFs. For the first time since their launch, there have been five consecutive days of outflows,
Source: Farside Investors
Over the last 5 days, more than 767 BTC has left the U.S. spot ETFs, erasing the previous week of growth.
N.B. markets were closed on 02 Sep 2024 for Labor Day.
Bitcoin's correlation with the S&P 500 and Nasdaq Composite has increased in recent months, suggesting it's becoming more integrated with traditional financial markets.
Looks like the regularly memed “sell in May, go away” strategy would have worked out well, so far.
Q4 Looks Bright
While this price action took most by surprise, not everyone was caught unawares.
Fortunately, there is light peaking above the horizon.
Q4 tends to be one of the most promising quarters for growth, while October is typically one of the most profitable months, and both are just weeks away.
According to data from Coinglass, Bitcoin historically gained an average of 88.84% in Q4 and 22.9% in October alone. Should this repeat itself, Bitcoin could exceed $110,000 by year-end based on its current value of $58,300.
Given that Bitcoin dominance tends to fall during true bull runs, we could expect altcoins (AI tokens in particular) to outperform these figures should history repeat itself.
Currently, Polymarket predictions estimate a 64% chance of a 25 bps rate cut on September 18 and a 35% chance of a 50+ bps rate cut.
As one of the most bullish events of the year, the rate cuts are widely expected to positively impact the crypto market and potentially kickstart a change in investor sentiment — though may temporarily introduce more volatility if a “sell the news” event occurs.
Former BitMEX CEO Arthur Hayes shares a similar sentiment, stating in his recent email newsletter that liquidity will increase following the rate cuts, doubly so if United States Secretary of the Treasury Janet Yellen opts to inject more liquidity into the market.
We’re now just weeks away from seeing a clearer direction in the market.
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