As a seasoned crypto investor with a knack for spotting trends and understanding market dynamics, I find the recent Nvidia stock sell-off intriguing. Having weathered multiple market corrections in the past, I can confidently say that these downturns often present golden buying opportunities. Tom Lee’s analysis aligns with my own perspective, and I believe that the current drawdown in Nvidia could be just a temporary profit booking.
On a Friday, the decline in Nvidia stock continued as its shares plummeted over 4%, reaching $102.83. Over the last seven days, the price of Nvidia shares has dropped by 14%, causing turmoil throughout the entire U.S tech sector. Fundstrat analyst Tom Lee thinks that this dip might offer a good opportunity to invest in Nvidia shares. The crypto market appears to be following suit, as Bitcoin and alternative cryptocurrencies experienced significant corrections the day prior.
Nvidia Stock Sell-off Presents Buying Opportunity
On Friday during the Closing Bell segment on CNBC, Fundstrat analyst Tom Lee expressed his belief that the decline in Nvidia’s stock could be coming to an end shortly. The host of CNBC noted that Nvidia’s valuation has risen significantly over the past year and may now contain too much optimism or overvaluation.
Tom Lee commented in response, stating that over the past decade of Nvidia’s existence, there have been nearly eight instances where the NVDA share experienced a 30% drop. He noted that despite these previous drawdowns, Nvidia stock’s Price-to-Earnings ratio (PE) actually increased. This time, he finds the PE ratio comfortably in the mid-20s. Lee interprets this as typical profit-taking and suggests that it could potentially lower the share price to the 90s. However, he considers this a beneficial buying opportunity if one is willing to hold for four years.
Are these sell-offs in Nvidia a buying opportunity? @Fundstrat’s Tom Lee makes the case $NVDA
— CNBC’s Closing Bell (@CNBCClosingBell) September 6, 2024
Tom Lee isn’t the only one advocating for an optimistic outlook on the chipmaker. Similarly, Bank of America has put forth a forecast for Nvidia stock reaching $165, a move that may stimulate growth in various AI-related tokens and potentially bolster the overall crypto market as well.
For the past week, a significant chunk of $406 billion from the chipmaker’s market value has been reduced due to the Department of Justice launching an antitrust investigation. Yet, Nvidia dismissed the DOJ’s subpoena, stating they are prepared to collaborate with the regulatory body should further inquiries arise.
Bitcoin Shows Resilience Amid NVDA Share Rout
Over the past month, Nvidia’s stock has experienced significant fluctuations, ranging from $90 to $130. These dramatic shifts represent the most turbulent fortnight for NVDA shares in the last two years. This stock market turbulence has even eclipsed Bitcoin’s price volatility during the same period.
Indeed, it appears that the Bitcoin price has been responding to fluctuations in the value of NVIDIA shares, which saw a 9% decrease over the past week. Analysts are forecasting a potential drop in the Bitcoin price to around $49,000 as a result. Similarly, various AI-related coins have experienced a 15% decline on their weekly charts, mirroring the drop in NVIDIA shares.
Therefore, a potential rebound in Nvidia might spark a similar upswing in Bitcoin and the overall crypto market. It’s intriguing to observe if there are further setbacks in September before a substantial recovery takes place. As demonstrated by Rekt Capital, the price of Bitcoin has already surpassed the typical correction during the September months in years following a halving event.
#BTC
Bitcoin is currently in a Halving year
So it makes most sense to compare 2024 with previous Halving years
2016:+6% September upside followed by +14% October upside
2020:-7.5% September downside followed by +27.7% October upside
2024:Currently -9% September…
— Rekt Capital (@rektcapital) September 6, 2024
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2024-09-07 10:12