Nvidia’s Hotly Anticipated Earnings May ‘Trigger’ Bitcoin and Crypto Correction, Analyst Says

Nvidia’s fourth-quarter earnings could trigger a broader correction for equities and crypto if it fails to live up to the hype.

AI-related tokens such as OCEAN and FET may also trade off Nvidia’s earnings and outlook for the sector.

The bitcoin {{BTC}} and the broader crypto rally could come to a halt if Nvidia’s (NVDA) fourth quarter earnings fail to live up to the lofty Wall Street expectations, Singapore-based QCP Capital said in a recent note.

“A key event today that could trigger a wider correction is Nvidia earnings which will be released after the US close,” QCP wrote in a note. “As a major part of the S&P500 Index, Nvidia’s performance could set the tone for US equities in the near-term.”

Nvidia, the GPU giant that designs chips necessary for the AI revolution, is set to report its earnings on Wednesday after the market closes in the U.S. The chip-maker’s stock is up nearly 220% over the last year. The market will be sharply focusing on the potential for the stock to sustain the face-melting rally. In fact, the rally has been so hot that Goldman even called it “the most important stock on planet earth” as options traders are betting on a move in either direction of 11%.

“Nvidia is currently trading at 90x P/E and Q4 earnings expectations have been adjusted higher recently,” QCP said. For comparison, Amazon.com (AMZN) currently trades at 52.4x and Tesla (TSLA) at 57.7x price-to-earning (P/E) ratio, according to FactSet data.

With such a high valuation, the margin of error is very slim. “At these valuation multiples and high expectations on earnings, any disappointment could see a sell-off. That would certainly put a drag on U.S. equities and crypto prices as well,” QCP continued.

Nvidia vs. BTC Price (TradingView)

Another crypto sub-sector that could see a volatile trading session from Nvidia’s earnings is the artificial intelligence (AI) -related tokens such as Ocean Protocol’s OCEAN and Fetch.AI’s FET. Given the influence the chip maker has on the sentiment of the AI industry, crypto traders will be keeping an eye on assessing Nvidia’s outlook on the sector and trade accordingly.

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