Even the cryptocurrency market is hanging on NVIDIA’s every word.
Fear resurfaced in the cryptocurrency market on Wednesday as the sector faced greater uncertainty about its future. The news events weren’t dire, but a tech sector drop today was enough to cause a selloff in the cryptocurrency markets.
At 3:00 p.m. EDT, Bitcoin (BTC -1.53%) has fallen by 5.2% over the past 24 hours, while Ethereum (ETH -1.62%) was down 3%, and Dogecoin (DOGE -1.43%) was down 5.2%.
NVIDIA Dominates the World
The tech industry is once again eagerly awaiting NVIDIA’s earnings report, which is set to be released after the market closes. NVIDIA no longer has much direct impact on the cryptocurrency, now that Ethereum has transitioned from proof-of-work, which was largely done on NVIDIA chips, to proof-of-stake. But the stock is currently driving sentiment in tech and much of the broader market. So anxiety about what the company will release is permeating the market.
While the results won’t directly impact cryptocurrencies, don’t be surprised if crypto trading is largely correlated with NVIDIA and tech stocks tomorrow. The sector has become increasingly correlated with tech and growth stocks over time.
Cryptocurrency trials in Russia
Bloomberg reported that Russia is testing the use of crypto payments to help the country’s companies circumvent international sanctions. One of the most powerful tools the United States and its allies have against countries is sanctions that block companies from accessing the global financial system. But that won’t work if Russia and similar countries start using crypto rails.
While this is not necessarily negative for crypto as a whole, it could reduce the likelihood of developed countries adopting crypto more widely if it is used to bypass traditional financial systems.
To top it all off, the arrest in France of Telegram founder Pavel Durov could put a hugely popular crypto communications tool into question. Telegram is popular among Bitcoin enthusiasts, and the pressure on its founder is not seen as a good thing for the industry.
SEC Continues Scrutiny of Cryptocurrencies
OpenSea, a popular non-fungible token (NFT) trading company, also announced that it had received a Wells notice from the Securities and Exchange Commission (SEC), accusing it of selling securities. This is the latest in a long line of Wells notices received by industry players in the United States, and they continue to cloud the future of the sector.
Ethereum is the blockchain on which most of OpenSea’s transactions took place, but NTF enthusiasts were also interested in meme coins like Dogecoin and larger tokens like Bitcoin, so this isn’t a positive for the industry’s push to the mainstream.
Cryptocurrency Trading Trends
Daily cryptocurrency price action continues to track tech and growth stocks, so it’s no surprise that cryptocurrency values are down on a bad day on Wall Street.
What’s more worrying is that the cryptocurrency industry is failing to get regulatory clarity, even though the SEC has lost most of the high-profile cases against companies. But without clarity, there will be no innovation in the industry.
I think today’s move is mostly noise, but the crypto market drop could continue if the tech industry pulls back in the coming weeks. Unfortunately, there are no fundamentals supporting the crypto market at this point.
Travis Hoium has positions in Ethereum. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
