Bitcoin and Nvidia stock (NVDA) are now moving more closely together than at any point in the past year. The 52-week correlation between the two assets has climbed to 0.75, according to data through Friday.
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The timing coincides with record valuations for both. Nvidia’s share price has surged 43.6% year-to-date to $195.30, while Bitcoin has gained 35.25%, trading above $126,000 earlier this week.
The close alignment suggests traders may be viewing Bitcoin as a high-beta tech play rather than a distinct digital asset. Some analysts warn that this growing correlation could leave Bitcoin vulnerable to a major correction if the AI boom slows down.
Market commentator The Great Martis described the current setup as a “double bubble,” linking the rise of AI and crypto to speculative excesses seen in the late 1990s.
AI Investments Create a Self-Reinforcing Loop
Recent deals among top AI companies have raised concerns about a circular investment pattern driving valuations higher. OpenAI this week agreed to spend tens of billions of dollars on AMD (AMD) chips over several years, with AMD set to become one of OpenAI’s largest shareholders.
At the same time, OpenAI has signed a $300 billion deal with Oracle (ORCL), which is already a strategic computing partner for Nvidia. Nvidia plans to invest $100 billion into OpenAI, while both companies are also channeling billions into the cloud firm CoreWeave (CRWV). Nvidia has purchased $6.3 billion of CoreWeave services, and OpenAI has committed up to $22.4 billion.
Analysts warn that this concentration of investment within a small circle of firms is creating the same reflexive environment that defined the dot-com boom. “People often forget that the Dotcom bubble caused an 80% Nasdaq crash,” said The Great Martis. “Today, similar irrational exuberance and a trillion-dollar crypto sector resembling a Ponzi scheme exist.”
Parallels to the Dot-Com Bubble Grow Stronger
Market observers are increasingly comparing today’s AI-crypto rally to the speculative tech frenzy of the late 1990s. Back then, companies such as Cisco (CSCO) effectively funded their own demand by financing the gear purchases that inflated their revenue figures.
The pattern of AI companies investing in one another has drawn similar scrutiny. Analysts note that just as the dot-com bubble relied on self-reinforcing optimism, the current AI cycle may be driven by overlapping corporate bets rather than real, external demand.
“The data points to immense selling pressure, creating a high risk of a sharp correction,” said one analyst, referencing the broader tech-crypto dynamic.
Bitcoin Could Be Among the Biggest Losers
Trader and educator Adam Khoo warned that Bitcoin may face steep losses if the AI and crypto rally unravels. “When the AI/Crypto/Quantum/Nuclear bubble bursts, the overvalued and unprofitable names in these sectors will drop 50% to 80%,” Khoo said.
Khoo noted that Warren Buffett’s strategy during the 2000–2002 downturn provides a stark contrast. Buffett’s Berkshire Hathaway (BRK.B) gained 80% by avoiding tech stocks and focusing on profitable companies such as Coca-Cola (KO), American Express (AXP), and Moody’s (MCO).
“Money ran out of tech and flowed into all the non-tech,” Khoo said, adding that Bitcoin could see similar downside once speculative capital exits AI-linked assets.
Buffett, who famously called Bitcoin “rat poison squared,” holds neither Nvidia nor AMD shares and now sits on a record $350 billion cash pile. Analysts say the position echoes Berkshire’s cautious stance ahead of the dot-com collapse two decades ago.
There Is a Risk of a Chain Reaction
The overlapping exposure between AI and crypto assets could amplify volatility across both markets. If AI valuations correct sharply, Bitcoin could follow due to their rising correlation and shared investor base.
While both sectors remain popular for growth-oriented traders, analysts say the concentration of capital in a few interconnected companies increases systemic risk. A slowdown in one corner of the AI market could trigger broader selling pressure, spilling into digital assets.
Whether or not the current cycle ends in a crash, the warning signs from past speculative bubbles are growing harder to ignore.
At the time of writing, Bitcoin is sitting at $119,209.93.
