The market sentiment suddenly shifted from "Risk On" to "Risk Off"! Both Bitcoin and NVIDIA suffered heavy losses

According to the Zhitong Finance and Economics APP, the two hottest risk assets globally this year - the world's largest market value cryptocurrency Bitcoin and the global AI chip leader NVIDIA (NVDA.US) - have just experienced a rapid decline in value in a few days, reminding greedy short-term speculators that the hottest trades in the market are far from simple one-way bullish bets.

During the US stock trading hours on Monday, the trading price of the world's largest cryptocurrency Bitcoin experienced one of the largest declines since the beginning of the cryptocurrency market recovery last year. Investors urgently need $60,000 as an important technical support price for the cryptocurrency to avoid more pain. On Monday, the price of Bitcoin once fell below the $60,000 mark, currently showing some signs of recovery, hovering in the $60,000-$61,000 range.

At the same time, the representative of the global artificial intelligence revolution, NVIDIA's stock price, fell nearly 7% in a single day, losing about $430 billion in market value over the past three trading days. For any large-cap stock, this decline is considered one of the largest three-day market value losses in history.

After briefly topping the global market cap rankings last week, NVIDIA's stock price has fallen for three consecutive days. Following the panic-driven intense selling pressure brought by the expiration of stock options on "Triple Witching Day" last Friday, as well as significant cashing out by NVIDIA management including Huang Renxun and the pressure from retail investors to take profits, after soaring 240% in 2023 and skyrocketing over 150% since 2024, NVIDIA finally couldn't withstand the massive sell orders, leading to a significant drop in stock price in just three days.

Sudden Change in Market Risk Appetite

From a long-term perspective, these two globally hot risk assets still enjoy astonishing returns. But this volatility has once again raised a question: with the latest interest rate "dot plot" indicating that the Fed may maintain higher rates for a longer period, and the dot plot suggesting that the Fed may only cut rates once this year or even not cut rates, the cracks in popular trades linked to the "spirit of the times" seem to be growing.

In the view of some analysts, this indicates that the outlook for risk appetite is becoming increasingly grim, and the market's risk for these two hottest assets, Bitcoin and NVIDIA, has suddenly shifted to "Risk Off" in the short term, rather than "Risk On", catching some short-term investors off guard and forcing them to reduce speculative positions to minimize losses.

Chris Weston, research director at investment firm Pepperstone Group, said: "People are starting to realize that this intense momentum is two-way, potentially triggering sharp rallies or plunges" He added that Bitcoin needs a frenzy of emotions to cheer for this wild beast, while NVIDIA's 'long position saturation is incredibly unbelievable'.

Bitcoin stabilized relatively on Tuesday, once again reclaiming $61,000. Asian stock markets and Nasdaq 100 index futures, which are dominated by technology stocks, both rose. The rapid signs of rebound in these markets all indicate that the global frenzy of enterprises deploying AI over the past year, as well as some institutions bullish on gold and cryptocurrencies benefiting from the inevitable Fed rate cut cycle, are still strongly supporting a more resilient investor sentiment.

Carol Schleif, Deputy Chief Investment Officer of BMO Family Office LLC, recently pointed out that while the S&P 500 index rose on Monday, one of its leaders, NVIDIA, was in trouble. However, the equal-weighted benchmark S&P 500 index completely removed market weighting, diluting the impact of the sharp drop in large tech stocks, and recent trends have been significantly better than the weighted S&P 500 index. She emphasized: "You need an expanding market for sustainability." "We believe that fundamentals can affect the value of more industries, not just large tech giants like NVIDIA."

From a long-term perspective, the value prospects of Bitcoin and NVIDIA are still worth looking forward to

Some cryptocurrency traders are increasing their bets that Bitcoin will hit a new all-time high by the end of the year, as they are optimistic about at least two Fed rate cuts this year and the increasing inflow of funds into Bitcoin exchange-traded funds (ETFs).

Michael Novogratz, Founder and CEO of Galaxy Digital, said that a more positive political environment in the United States towards digital assets may help push Bitcoin to a record $100,000 by the end of this year, or even higher. He said in an interview: "If the price of Bitcoin rises to $73,000 in the next few weeks, it will rise to $100,000 or higher by the end of this year."

Caroline Bowler, CEO of BTC Markets Pty, said: "Cryptocurrencies like Bitcoin are increasingly influenced by macro factors such as Fed rate expectations." She added that she remains optimistic about the long-term investment prospects of cryptocurrencies.

According to a recent research report released by Bernstein, the institution's fundamental forecast shows: Bitcoin is expected to reach $200,000 by 2025, $500,000 by 2029, and $1 million by 2033.

Ari Wald, Technical Analysis Director at Oppenheimer, pointed out that for NVIDIA, long-term trends are more important than any specific stock price point. Currently, NVIDIA's fundamental expectations and long-term uptrend remain strong, with the stock price still well above the 50-day moving average of around $100 and the 100-day moving average of $92."Wald said: "Generally, the formation of the main top of the stock price requires a process, with several rounds of buying and selling, then the price momentum gradually weakens, followed by the breach of key price levels. Currently, we have not found these signs."

Bruce Zaro, Chief Technical Strategist at Granite Wealth Management, also pointed out: "For stocks like NVIDIA that are in an uptrend, even if breaking below the first support level of $115 is not a big issue, falling below $100 would be concerning."

In terms of stock price, Wall Street's target stocks are far behind NVIDIA's price surge. Benefiting comprehensively from the unprecedented AI frenzy, NVIDIA's stock price has surged, impressing global investors. Following a 240% surge in 2023, the stock price has soared by 170% since 2024.

Looking at a longer time frame, NVIDIA's stock price has skyrocketed by over 1000% since October 2022, briefly becoming the world's highest market cap listed company last week, claiming the title of "Global Stock King" for the first time. After this 1000% AI frenzy, global funds may shift from irrational exuberance to rational thinking, potentially indicating a short-term downward adjustment or consolidation in NVIDIA's stock price, but it is difficult to change NVIDIA's position as the "AI shovel seller" in the AI era with a "long bull trend" in stock price.

Analysts at Bank of America believe that the stock still represents a very attractive investment opportunity. Bank of America emphasizes that any degree of decline in NVIDIA's stock should be seen as a good opportunity to buy more stocks at a lower price. In their latest report, Bank of America analysts wrote that investors should continue to be optimistic about this chip giant driving the prosperity of AI, and Bank of America reiterated its "buy" rating on NVIDIA with a target price of as high as $150, implying at least about 20% upside potential within the next 12 months.

In the report, Bank of America emphasized that the hardware deployment cycle of Generative AI (GenAI) could last up to 3-5 years, but is currently only in the 2nd year, expecting NVIDIA to have a long-term growth opportunity of up to $300 billion, roughly three times the company's expected revenue this year. Bank of America also expects NVIDIA's next-generation AI GPU based on the Blackwell architecture to bring significant revenue contributions, and Bank of America refutes the "AI bubble argument" derived from the "Internet bubble period" in 2000, emphasizing that unlike the "Internet boom period" which relied on high-risk debt financing, the deployment of generative AI is a competition among some of the most financially robust leaders in the tech sector with strong fundamentals such as cloud computing giants.**

As billionaire investor Stanley Druckenmiller put it, from the perspective of the long-term development of artificial intelligence technology, the value of NVIDIA, perhaps dubbed the "most important stock on Earth," may still be underestimated.

Recently, the well-known Wall Street investment firm Rosenblatt released a heavyweight research report, with the core content being: Based on the potential prosperity expectations of NVIDIA's software business centered around CUDA, even though the stock price of AI chip leader NVIDIA has skyrocketed in the past year, the stock price of this chip giant is expected to continue to rise in the next 12 months, with NVIDIA's stock price projected to be at least 50% higher than the current level. This is the view of Rosenblatt's chip industry analyst Hans Mosesmann, who in this report significantly raised the institution's 12-month target price for NVIDIA from $140 to an astonishing $200 per share, ranking it as the highest target price for NVIDIA on Wall Street.

This latest bullish forecast from Rosenblatt also implies that NVIDIA, recently crowned the "world's highest market value listed company" for the first time, may reach a total market value of $5 trillion within 12 months. Looking ahead, analyst Mosesmann stated that NVIDIA's true source of strong profits lies not only in its focus on driving core AI hardware infrastructure such as high-performance AI GPUs that power ChatGPT, but also in NVIDIA's software business, led comprehensively by NVIDIA's popular CUDA software-hardware collaborative platform. The combination of "CUDA+AI GPU" forms NVIDIA's incredibly powerful moat.