After the recent announcement by the Federal Reserve to maintain interest rates, the price of Bitcoin has shown similar volatility to the Nasdaq Index and AI stocks, highlighting an increasing correlation between Bitcoin and these high-tech stocks.
Summary:
– The Federal Reserve announced the maintenance of overnight benchmark interest rates at 5.25% to 5.5% and Chairman Jerome Powell expressed uncertainty regarding the timing of rate cuts, stating that it would take longer than originally expected for the central bank to have sufficient confidence to initiate a rate cut. Additionally, Powell released dovish signals, clearly stating that the next action by the Federal Reserve cannot be an interest rate hike.
– Against this backdrop, the four major US stock indices had mixed performance. The Dow Jones Index initially rose by over 530 points but ultimately closed with an increase of 87.37 points. In contrast, the Nasdaq Index initially fell before the interest rate decision and was influenced by Powell’s dovish comments after the meeting. It briefly rose to 15,926.22 points at 3:00 AM but later declined, closing with a decrease of 52.34 points at 15,605.48 points.
– Within the Nasdaq Index, AI stocks performed the worst, particularly due to the drag from AMD (Advanced Micro Devices) and SMCI (Super Micro Computer). The stock prices of these two companies fell by 8.91% and 14.03% respectively.
– The significant decline of AMD and SMCI was caused by not meeting investors’ optimistic expectations for the AI market, resulting in significant selling pressure. AMD announced its financial results for Q1, which were in line with market expectations. However, its Q2 revenue forecast of 6% to $5.7 billion only roughly matched Wall Street’s initial estimate of $5.72 billion. While the revenue forecast for AI chips for the full year was revised from $3.5 billion to $4 billion, it fell far short of some investors’ optimistic expectations of $8 billion.
– SMCI announced its financial results on the 30th, and although its Q1 profits exceeded expectations and its full-year financial forecast was raised, its revenue growth of 200% fell short of the market’s expected 206%. Additionally, its Q1 gross margin was lower than the same period last year, and the CFO’s expectation of a decline in gross margin in the current quarter raised concerns about the profitability of its new server products, leading to a decline in stock price.
– It is worth noting that the price trend of Bitcoin in the early morning followed a similar pattern to the Nasdaq Index, both falling before the interest rate decision and then continuing to rise until 3 AM, followed by a sharp decline, with almost all of the gains being given back. As of the US stock market closing time, Bitcoin had fallen by 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. Especially, the sharp drop in SMCI on March 14 coincided with the steep decline of Bitcoin, further illustrating the interdependence of Bitcoin and the sentiment of the AI stock market.
– Based on the recent price increase and all-time high of Bitcoin, the main driving factors for its price volatility may include the surge caused by the introduction of spot ETFs and the short-term overflow effect of funds from AI-related investments.
– Looking ahead, Bitcoin is already subject to spot ETFs and is considered as high-risk as tech stocks in the US investment risk spectrum. Therefore, it is speculated that in the short term, if the AI stock market bubble continues to burst, the price trend of Bitcoin may remain sluggish or even have downside 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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