While the company’s increasing revenue assuaged tech stock concerns that AI is a bubble, it did little to lift up the crypto AI sector tokens.
They are in a multi-month downtrend. Unless Bitcoin’s price action stabilizes or reverses bullishly, altcoins will continue to suffer losses.
On 19 November, tech industry giant and key AI player Nvidia released its financial results for the third quarter of the fiscal year. Global share markets rose as the report exceeded Wall Street expectations.
The company reported record revenues, up 22% from the previous quarter, which addressed concerns that AI firms were too highly valued and had already peaked. Founder and CEO of Nvidia, Jensen Huang, told reporters that Nvidia is foundational to the major transformation happening in the AI sector.
This helped dispel concerns of an AI bubble. Was it enough to persuade investors to rotate capital into the crypto AI sector as well?
While the stock market reacted positively, the crypto AI sector was far more feeble in its response. It was not just AI though. Almost all altcoin sectors showed weakness as confidence tanked across the market.
After the first week of November, the AI sector market cap has been on a downtrend. This downtrend stretched back to late September. Internet Computer’s [ICP] rally in the first week of November briefly saw the AI sector market cap trend higher. Bittensor [TAO] and NEAR Protocol [NEAR] also trended higher during that period.
Bitcoin [BTC] lost the $100k support around that time, which might have shifted market sentiment towards strong bearishness. Meanwhile, the DeFi sector was also bearish, but shed less of its market cap.
Since 28 October, the AI sector market cap has fallen from $28.31 billion to $21.88 billion at the time of writing – A 22.7% loss. DeFi has shed 21% of its value, falling from $114.53 billion to $90.5 billion.
Capital rotation from DeFi to the AI sector has not yet occurred. If anything, capital seems to be leaving the crypto markets. A shift in narrative and more risk-on conditions could help turn the price trends around.
