Even the cryptocurrency market is keeping a close eye on NVIDIA’s statements.
Fear crept back into the crypto markets on Wednesday as the industry faced further uncertainty about its future. While the news events were not dire, today’s drop in the tech sector was enough to trigger a sell-off in the crypto markets.
3pm EDT Bitcoin (BTC -4.67%) It has fallen 5.2% in the past 24 hours. Ethereum (ETH -2.32%) It fell 3% Dogecoin (Doge -3.91%) It decreased by 5.2%.
NVIDIA Wins
The tech world is once again anxiously awaiting NVIDIA’s earnings report, scheduled to be released after the market closes. NVIDIA no longer has a direct influence on cryptocurrencies, as Ethereum has moved from proof-of-work, which was primarily done on NVIDIA chips, to proof-of-stake. But the company’s stock is driving much of the current sentiment in tech and the market at large, which is why there is a lot of anxiety in the market about what the company will report.
While this outcome won’t have a direct impact on cryptocurrencies, don’t be surprised if cryptocurrency trades tomorrow are broadly correlated with NVIDIA and tech stocks, as the industry has become increasingly correlated with tech and growth stocks over time.
Russia’s cryptocurrency trial
Bloomberg reported that Russia is testing cryptocurrency payments to help domestic companies circumvent international sanctions. One of the most powerful tools the U.S. and its allies have against other nations is sanctions to block companies from the international financial system. But that won’t work if Russia and other countries like it start using cryptocurrency as a payment method.
This is not necessarily a negative for cryptocurrencies as a whole, but it may make developed countries less likely to adopt them more widely if they are being used to circumvent the traditional financial system.
To make matters worse, the arrest of Telegram founder Pavel Durov in France could bring the popular crypto communication tool into question: Telegram is popular with Bitcoin enthusiasts, and any pressure on its founder is not seen as good for the industry.
SEC Continues Cryptocurrency Enforcement
Popular non-fungible token (NFT) trading company OpenSea also announced that it had received a Wells Notice from the Securities and Exchange Commission (SEC) for selling securities. This is the latest in a long series of Wells Notices received by industry participants in the United States, and continues to cast a dark shadow over the future of the industry.
While most of OpenSea’s transactions were conducted on the Ethereum blockchain, NTF enthusiasts were also interested in meme coins like Dogecoin and larger tokens like Bitcoin, so this doesn’t bode well for the industry’s mainstream push.
Cryptocurrency trading trends
Cryptocurrency’s daily price fluctuations continue to track tech and growth stocks, so it’s not surprising to see its value drop on bad days on Wall Street.
What’s even more concerning is that the cryptocurrency industry has been unable to achieve regulatory clarity, even as the SEC has lost most of the high-profile cases against companies. But without clarity, there will be no innovation in the industry.
I believe today’s moves are mostly noise, but if the tech sector retreats in the coming weeks, cryptocurrency declines could continue. Unfortunately, there are no fundamentals supporting the cryptocurrency market at this time.
Travis Hoium has invested in Ethereum. The Motley Fool has invested in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
