Why Is NVIDIA's Decline Bigger Than It Seems?

The U.S. Department of Justice sent a subpoena in connection with an investigation against NVIDIA, fearing that the company could make it harder for customers

After a shocking record-breaking drop by NVIDIA, some time has passed and data is starting to emerge on how it affected the market, as well as what other events may be related to it.

In particular, Tom Lee warns that we may see a 7% to 10% drop in the next few months, and the crypto market could be affected even more.

At the same time, Mark Yusko shared a classic tactic of manipulating asset prices in the stock market and suggested that with the arrival of Bitcoin ETFs, it began to be applied to the crypto market.

In particular, BlackRock and their Aladdin system theoretically have the greatest opportunity to practice this.

Why Is NVIDIA’s Decline Bigger Than It Seems?

The U.S. Department of Justice sent a subpoena in connection with an investigation against NVIDIA, fearing that the company could make it harder for customers to switch from customers to other GPU vendors, especially for AI.

This triggered a historic drop, causing the company to lose

$300B, which is equal to the total capitalization of 474 companies in the SNP 500.

Of course, this pulled down the entire stock market, and as a result, the U.S. stock market lost about $1T during the day, followed by the Japanese stock market.

Tom Lee comments on the coming market declines:

“Investors should be cautious for the next eight weeks. When markets were up seven of the eight months this year, we know it’s an incredibly strong market, but we also have the September [interest-rate] cut and we have the election – things that will get people nervous. I think in the next eight weeks, people will get a chance to buy. So I think it’s good to be cautious, but just [be] ready to buy that dip.”

It’s worth remembering that historically September is the worst for the stock market, but November is one of the best, which is not a guarantee, but an obvious trend.

This can be seen in the chart of the largest outflow from Bitcoin ETFs, which amounted to $287M, where first Fidelity, then GrayScale, but Blackrock still holds.

Why Is It Related to Bitcoin and Bitcoin ETFs?

In this context, there are very strong comments from Mark Yusko, which echo all the concerns of those who were initially skeptical about the intervention of institutions and funds in the crypto market.

In his opinion, these actors can manipulate the Bitcoin price by selling Bitcoin futures. This is a common tactic they use to manipulate stock market prices and now they can use it on Bitcoin. And it sounds convincing considering that for almost 200 days Bitcoin has remained in this range of $60K despite an unprecedented amount of positive news on its support and adaptation.

Yusko said the following:

“Bitcoin ETF spot trading in itself is not a bad thing, because there is a good demand for it. But the problem is that the price is also affected by the market, is that we can see almost every day all these big drops from $1000 to $1500. How does that happen? Who’s selling? Nobody is selling. Nobody who owns Bitcoin on cold storage or balance sheet is selling. Nobody who holds ETFs is selling.

It’s selling those futures and that changes the price. Because there’s a little bit of a catch to how ETFs work. ETFs don’t trade all day, they trade in a very small window at the end of the day, so it’s logical if you have a big order and you know about it and you’re Blackrock – you have to fulfill that order on Bitcoin.

And you definitely don’t want the price to be high, you want the price to be low, so actually Blackrock may be selling from some other wallet, they may go sell Bitcoins on the futures market to drive the price down and buy them cheaper. This happens on Wall Street all the time with all assets and now we’re seeing it on Bitcoin”

More importantly, Blackrock created an AI-based trading software called Aladdin back in 1988. Since then its development has not stopped and Blackrock uses this tool for all their trades, probably for Bitcoin as well.

The most important is the coincidence of dates, and in particular, Coinbase, the exchange chosen by Blackrock as the custodian for the spot Bitcoin ETF provides access to crypto trading to Aladdin clients via Coinbase Prime from August 4, 2022.

And that’s one of the things that opponents of institutional intervention and fund participation have been warning about.

Why Is This Potential Manipulation of Bitcoin Doomed?

Of course, if it does happen, it is unlikely that manipulating the price will work forever, as demand for Bitcoin is growing rapidly.

この需要は主に金利引き下げの遅れ、

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