Will Nvidia Stock Crash After The China Ban Hits The Crypto Market?

Nvidia stock price pulled back after suffering a major setback in China’s global semiconductor market.

NVDA share price was trading at $172.9, down by about 6.25% from its highest level this year. This article explores how this news will impact the company and its implications for the crypto market.

Nvidia Stock Price at Risk as China Bans its Chips

Nvidia stock price pulled back as China asked its top companies to stop using its semiconductors. The Cyberspace Administration of China (CAC) asked top firms to stop testing their RTX Pro 600D chip orders.  It is made specifically for the country.

The names of those top firms include Alibaba and ByteDance. The Financial Times reported this development. The announcement came even as Chinese and Beijing officials continued their talks in Madrid.

One of the main success stories that has emerged from the negotiations is the progress on TikTok. It’s the social media platform owned by ByteDance. China has several reasons for banning Nvidia chips.

First, officials believe its semiconductors made for the Chinese market are no better than those manufactured domestically. Second, the country wants to become a semiconductor powerhouse by incentivizing local manufacturers.

Beijing wants to reduce its reliance on Washington. It sees U.S. policy as unpredictable in recent years. Further, most recently, officials have been concerned that Nvidia chips may have a backdoor that Washington can use.

The company has denied these claims. However, US officials have pushed for having some location trackers to prevent chip smuggling to China. Additionally, officials may have become concerned about a recent agreement between Nvidia and the US government.

The deal means the company would share its profits with the United States government. Most recently, China ruled that Nvidia violated antitrust laws as officials started a review of US chip companies.

China’s Ban Implications for NVIDIA

In theory, China’s decision to ban Nvidia chips is a big deal, as the company used to do a lot of business there. China is still the biggest semiconductor market in the world.

However, its recent results showed it can still generate substantial earnings growth without China. Its recent results showed that its revenue rose by 56% YoY to over $46.7 Billion.

This growth was driven by a 56% surge in data center revenue, which jumped to over $41.1 Billion. Notably, the results did not include any sales to China.

The company’s guidance is that its third-quarter revenue would be $54 billion. Notably, the guidance did not include any sales to China, a sign that its business will still do well.

Nvidia Stock Price Could Crash to $150

Technical analysis is sending mixed signals about the Nvidia stock price. On the positive side, the stock could surge in the coming weeks if it moves above the year-to-date high of $184.

As most Wall Street analysts expect, it may jump to over $200 if this happens. For example, Morgan Stanley and Bank of America hope to hit $250 over time.

However, there is also a risk that the China ban may push it to support at $152. Besides, the Relative Strength Index and the MACD indicators all go downward.

Implications for the Nvidia Chips Ban on the Crypto Market

A sustained Nvidia stock price crash after the China ban could have implications for the crypto market. That’s because Nvidia is both the biggest company in the United States.

It has also become the face of the artificial intelligence industry. This sector has driven the stock market to record highs in the past two years.

Nvidia also accounts for a big share of the S&P 500 and the Nasdaq 100 indices. As such, its crash will likely lead to a risk-off sentiment that may affect other risky assets like cryptocurrencies. Historically, weakness in the stock market tends to spread to the crypto industry.

The Federal Reserve is expected to begin cutting interest rates soon. This boosts both the stock and crypto markets. This may make risky assets like cryptocurrencies more attractive.