Here’s Why AI Crypto Coins are Falling Ahead of NVIDIA Earnings

Key Insights

• Top AI crypto coins have fallen sharply in the past few days.
• The decline is likely happening as investors book profits.
• It is also happening because of the broader crypto weakness.

AI crypto coins extended losses this week as traders rotated out of speculative assets amid broader market weakness. Bittensor (TAO), Venice Token (VVV), Internet Computer (ICP), and Artificial Superintelligence Alliance (FET) all posted sharp declines after strong rallies in April.

Bittensor fell for five consecutive sessions and touched its lowest level since May 2. Venice Token dropped more than 25% from this month’s high, while several major AI-linked tokens lost more than 15% over the past seven days.

Profit-Taking Hits AI Crypto Rally

Top AI crypto coins have retreated as investors started booking profits after the recent gains. Before the ongoing pullback, most of them were up sharply, with Venice Token jumping by over 1,500% from its lowest point this year.

Top AI crypto coins have fallen | Source: TradingView

TAO token was also up by over 45% between its lowest point in April and its highest point this month. Other top AI coins were up by double digits from their lowest levels in April. It is common for financial assets to pull back after having a strong rally.

Top AI Assets Have Dropped This Week

Venice Token and other AI coins are also dropping because of the ongoing weakness in the industry. Most AI stocks have dropped this week, which is happening as investors book profits.

For example, NVIDIA’s stock price dropped to $220 from the year-to-date high of $236. The Roundhill Memory ETF (DRAM), which was launched in April, dropped to $47 from last week’s high of $56.40. It is made up of the top companies in the memory industry, like Seagate, SK Hynix, Samsung, and Micron.

Other top AI companies like Palantir, C3.ai, Google, Meta, and Astera Labs have all dropped in the past few days. This retreat is happening as investors book profits after the recent rally and as they wait for NVIDIA earnings.

Wall Street analysts are upbeat about NVIDIA’s business as we head towards earnings. For example, the average estimate among analysts is that its revenue jumped by nearly 80% in the first quarter to $79 billion. If this is correct, it will make it one of the fastest-growing companies in the United States.

Most importantly, analysts expect that its earnings growth will continue now that the US has allowed it to sell the H200 chips to the largest Chinese customers like Alibaba and Tencent. It also plans to start selling its new CPUs later this year.

Crypto Market Weakness as Risks Rise

Top AI crypto coins are falling because of the ongoing weakness in the industry. Bitcoin price dropped to $76,830, much lower than this month’s high of $82,715.

Ethereum dropped to $2,115, down from this month’s high of $2,445. Most tokens have dropped, with the market capitalization of all of them falling from this month’s high of $2.71 trillion to $2.56 trillion. In most cases, AI coins drop when the industry is facing headwinds.

The crypto market is facing some major challenges. For example, US bond yields have continued to rise, with the ten-year and 30-year rising to 4.5% and 5.15%, respectively. That is a sign that market participants expect the Federal Reserve to maintain a hawkish tone.

The industry is also facing the challenge of fading demand. For example, Bitcoin, Ethereum, and altcoin ETFs have suffered substantial outflows in the past few days, erasing the gains experienced earlier this month.

Additionally, there are concerns that the industry is about to go through a deeper dive after Bitcoin has formed a rising wedge pattern.

Bitcoin price chart | Source: TradingView

The setup consists of two ascending and converging trendlines and often signals bearish reversals after extended rallies.

Further Bitcoin weakness could increase pressure on AI crypto coins and other speculative digital assets in the near term.

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