The stock market experienced a significant downturn on Tuesday, with investors pulling out of risky assets. This trend was particularly evident in the performance of two prominent assets: Nvidia and Bitcoin. Nvidia, the AI juggernaut that dominated Wall Street in 2024, saw its stock price plummet by 9.53%. Meanwhile, Bitcoin, the world’s largest cryptocurrency, suffered a decline of over 4%.
This volatility in both assets has left investors questioning which one might experience even greater fluctuations in the coming days. To gain insight, we can analyze their implied volatility (IV). IV is a forward-looking measure of volatility used by options traders to estimate the expected price fluctuations of an asset over a specific time period.
According to Fintel, Nvidia’s 30-day implied volatility stood at 55% after Tuesday’s market close, a notable increase from 46% recorded last Friday. This metric reached a yearly high of 90% during the early August market meltdown.
Bitcoin’s 30-day IV, as tracked by Deribit, a popular cryptocurrency options exchange, showed a reading of 56.03% as of this writing, according to TradingView. This figure has increased from 50% at the beginning of the month.
These analyses indicate that both Nvidia and Bitcoin are exhibiting roughly equal projected volatility, suggesting a growing correlation between them. This finding could have significant implications for investors seeking to navigate the current market uncertainty.
At the time of writing, Bitcoin was trading at $56,761.13, down 4.01% in the last 24 hours, based on data from Benzinga Pro. Shares of Nvidia were down 1.9% in pre-market trading.
As the market continues to navigate these turbulent times, it will be crucial to monitor the volatility of these key assets and their potential correlation to make informed investment decisions.
