After the Federal Reserve recently announced its decision to keep interest rates unchanged, the price of Bitcoin has shown similar fluctuations to the Nasdaq index and AI stocks, highlighting an increasing correlation between Bitcoin and these high-tech stocks.
Summary:
Fed Chairman Jerome Powell expressed confidence in reducing interest rates, but stated that it would take longer than originally expected for the central bank to have enough confidence to initiate a rate cut. Powell also made it clear that the next move by the Federal Reserve would not be a rate hike.
Against this backdrop, the four major US stock indices had mixed performances. The Dow Jones index initially rose by over 530 points but ultimately closed up 87.37 points. In contrast, the Nasdaq index fell before the interest rate decision and was influenced by Powell’s dovish comments. It briefly rose to 15,926.22 points at 3:00 am but later fell, closing down 52.34 points at 15,605.48 points.
Within the Nasdaq index, AI stocks performed the worst, especially due to the decline in AMD (Advanced Micro Devices) and SMCI (Super Micro Computer) stocks, which fell by 8.91% and 14.03% respectively.
The significant drop in AMD and SMCI stocks was a result of not meeting investors’ optimistic expectations for the AI market, leading to substantial selling pressure. While AMD’s first-quarter revenue was in line with market expectations, its second-quarter revenue forecast of a 6% annual increase to $5.7 billion only roughly matched Wall Street’s original estimate of $5.72 billion. The revenue forecast for AI chips for the full year was raised from $3.5 billion to $4 billion, but it fell far short of some investors’ optimistic expectations of $8 billion.
SMCI reported better-than-expected first-quarter earnings and raised its full-year financial outlook, with a 200% growth in revenue. However, it failed to meet market expectations of a 206% growth due to component shortages. Additionally, the first-quarter gross profit margin was lower than the same period last year, and the CFO’s expectation of a decline in the gross profit margin for the current quarter raised concerns about the profitability of its new server products, leading to a decline in stock prices.
It is worth noting that the price trend of Bitcoin in the early morning today was very similar to that of the Nasdaq index. Both experienced a decline before the interest rate decision announcement, followed by a continuous rise until 3 am, and then a rapid decline, with almost all gains being wiped out. As of the US stock market closing time, Bitcoin had fallen 3.89% in the past 24 hours.
This trend reveals a close correlation between Bitcoin and the Nasdaq index, as well as AI stocks such as AMD and SMCI. The coincidence of SMCI’s sharp drop on March 14th with the Bitcoin crash further demonstrates the linkage between Bitcoin and the sentiment of the AI stock market.
Looking at Bitcoin’s price surge and historical highs this year, the main driving factors behind its price volatility may include the one-time increase brought by the introduction of spot ETFs and the short-term overflow effect of AI-themed funds.
Looking ahead, with the current presence of spot ETFs for Bitcoin and the high-risk nature of the US investment spectrum, it is speculated that in the short term, if the market bubble of AI stocks continues to burst, the price trend of Bitcoin may remain sluggish or even have downward potential. However, it is also possible that Bitcoin is only temporarily correlated with high-risk AI stocks, and whether this positive correlation will continue in the future remains to be seen.
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