Nvidia Stock Shows Higher Volatility Than Major Cryptos

Nvidia (NVDA) stock is anticipated to experience more dramatic price fluctuations than major cryptocurrencies like Bitcoin and Ethereum.

Recent data shows that NVDA’s 30-day implied volatility has surged from 48% to 71%, according to Fintel. In contrast, Bitcoin’s implied volatility on Deribit’s index has decreased from 68% to 49%, and Ethereum’s has dropped from 70% to 55%.

Implied volatility reflects the market’s expectations for price swings and is influenced by the demand for options. NVDA, a key player in AI and former GPU producer for crypto mining, has become a significant market indicator since ChatGPT’s launch in late 2022.

Both NVDA and Bitcoin hit lows in late 2022 and have shown a strong positive correlation since, with a 0.73 correlation in 90-day price movements. However, NVDA’s stock has fallen about 26% from its peak of $140 last month, while Bitcoin remains in the $60,000 to $70,000 range.

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The increase in NVDA’s implied volatility may be linked to hedging activities by market makers, a trend also observed in the crypto sector. Griffin Ardern from BloFin explains that the current high volatility in NVDA is comparable to the extreme price fluctuations seen in cryptocurrencies, driven by negative gamma trading strategies which can amplify market volatility.