Cryptocurrencies Reverse Losses Despite Nvidia’s Plunge

Quick overview

Cryptocurrencies have reversed earlier losses after starting the day on a downtrend. Bitcoin has corrected and risen 0.2% to $85,230, according to Binance, while other cryptocurrencies also show slight movements.

The biggest losses are led by SUI, down by up to 3%, followed by Toncoin (-2.8%) and Avalanche (-2%). Ethereum, notably, has lost its support zone at $1,600. Among the gainers, Tron stands out with a 2% increase.

What Caused the Reversal in Cryptocurrencies?

As is often the case, attention is focused on the U.S., particularly the tech sector. After Wall Street closed moderately lower, a new announcement from Nvidia sparked a negative reaction in the markets. The tech company plunged in pre-market trading after revealing it would have to take a $5.5 billion charge due to U.S. restrictions on the sale of its H2O graphics processing units (GPUs) to China.

The H2O is an artificial intelligence (AI) chip designed to meet the export restrictions imposed by the previous administration under Joe Biden. In 2024, Nvidia had projected revenue of between $12 billion and $15 billion from this chip.

The same chip was used by the Chinese company DeepSeek to develop an AI system at a much lower cost than ChatGPT, making it a direct competitor. Yes, Nvidia’s decline not only affects the company but also other tech firms related to it, such as Broadcom and AMD, and, ultimately, Bitcoin.

In recent times, Bitcoin and cryptocurrencies, in general, have shown a strong correlation with risk assets, especially tech stocks.

On another front, analysts are keeping an eye on March’s retail sales report from the U.S., seeking insights into consumer spending behavior amid tariff-related uncertainties. However, there is a risk that the markets may dismiss this data, viewing it as outdated and not reflecting the recent escalation in trade tensions.

Tariff Policies and Growing Market Uncertainty

Regarding tariff policies, U.S. President Donald Trump imposed several tariffs, though he suspended some and announced more specific duties on certain products. These constant changes are causing discomfort in the markets, although the apparent moderation in recent days suggests that Washington is beginning to recognize the impact its volatile policy is having.

JP Morgan analysts, led by Jamie Dimon, warn that the global economy is at risk of entering a recession if the U.S. does not moderate its approach to the tariff conflict. Meanwhile, other major banks, such as Citi and Bank of America, have maintained a more optimistic outlook in their latest reports.

All Eyes on the Fed

Finally, attention is now focused on Federal Reserve Chairman Jerome Powell, who will share his view on the U.S. economy this Wednesday. Powell has been cautious about the impact of tariffs on inflation, a stance reflected in the minutes of the central bank’s last meeting.

Analysts expect that the Fed may need to cut interest rates more than previously anticipated this year, potentially three or four times, due to the growing risk of recession. However, some Fed members, like Kashkari and Goolsbee, remain more skeptical, fearing they could lose control of inflation.

ABOUT THE AUTHOR See More

Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.

Related Articles

Nasdaq Rises 2% as Tech Stocks Rebound

3 months ago

Save

Comments

0 0 votes

Article Rating

Subscribe

Login

Notify of

new follow-up commentsnew replies to my comments

Please login to comment

0 Comments

Oldest

Newest Most Voted

Inline Feedbacks

View all comments