Bitcoin rebounded on Tuesday, outperforming struggling stock markets as investors awaited Nvidia's Q3 earnings report, a potential bellwether for the AI sector's sustainability. The cryptocurrency jumped 4% from an intraday low of $89,300, reaching as high as $93,700. This contrasted with a decline in US equities, where the Dow fell as much as 1.2%, the S&P 500 dropped 1.1%, and the Nasdaq plunged 1.5%.
The tech sector's weakness was partly attributed to investors pulling back from AI-related stocks ahead of Nvidia's earnings release. Nvidia's stock slipped another 2%, compounding a 10% decline this month. The chipmaker's earnings are highly anticipated, with analysts projecting a 56% year-over-year revenue jump to $54.92 billion. Expectations are high, with some analysts anticipating adjusted third-quarter earnings per share of $1.26 on revenue of $55.4 billion. Some even suggest Nvidia will "beat and raise," exceeding quarterly projections and increasing its full-year outlook. However, a miss could spook investors and negatively impact other companies in the AI space.
The recent volatility in both crypto and stock markets follows a period of significant gains. Bitcoin had previously surged, driven by factors such as increased institutional adoption and the Trump administration's pro-crypto stance. However, it recently surrendered all of its 2025 gains, falling from a high of over $125,000 to below $90,000. Similarly, Nvidia's shares, which had risen by over 38% earlier in the year, have experienced a pullback.
On-chain data suggests that Bitcoin's rebound might not be as strong as it appears. The Coinbase premium gap, which measures the price difference between Coinbase (favored by institutions) and Binance (dominated by retail traders), has plunged to -$114.5, signaling waning institutional demand. A persistently negative premium suggests that the current market is influenced more by reactive retail traders.
Looking ahead, the sustainability of Bitcoin's rally remains uncertain. Some analysts, like Arthur Hayes, predict a surge to $200,000 by year-end, while others caution about potential downside risks. Technical analysis indicates that Nvidia remains in an uptrend, but a weaker-than-expected earnings report could trigger a substantial pullback. Options pricing suggests that traders expect Nvidia's stock to move nearly 7% in either direction following the earnings release.
Ultimately, the near-term direction of both Bitcoin and the broader market may hinge on Nvidia's ability to meet lofty expectations and reassure investors about the long-term potential of the AI sector.
