The AI token market took a significant hit, plunging 14.6% in a single day after reports emerged of an anti-trust investigation into Nvidia by Chinese authorities. The probe by China’s State Administration for Market Regulation has sent shockwaves through the AI and cryptocurrency sectors, highlighting the intertwined nature of these industries.
Key Details of the Nvidia Probe
China launched the investigation into Nvidia over alleged violations of the country’s anti-monopoly laws, specifically related to its acquisition of Mellanox Technologies in 2020. Nvidia, which derives approximately 15% of its revenue from China, saw its shares drop by 2.55%, closing at $138.81 in U.S. markets on December 10.
The investigation has had a ripple effect across the crypto market, especially among AI-focused tokens that rely on Nvidia’s technology for their operations.
AI Tokens Hit Hard
Several major AI tokens experienced steep declines:
- NEAR Protocol (NEAR): Fell by 8.6%, trading at $6.65.
- Render (RNDR): Dropped 9.7%.
- Akash Network (AKT): Decreased by 9.6%.
- The Graph (GRT): Lost 8%.
Other AI tokens saw even more significant losses:
- Bittensor (TAO): Fell by 14.38%.
- Arkham (ARKM): Dropped by 17.48%.
- Livepeer (LPT): Declined by 18.55%.
- Flux (FLUX): Lost 14.75%.
These losses dragged the AI token market cap down to $40.56 billion, signaling widespread volatility.
Broader Crypto Market Impact
The Nvidia probe coincided with a flash crash in Bitcoin, which briefly dropped below $95,000 from an intraday high of $100,200. This triggered liquidations amounting to $1.7 billion and a 6.8% decline in the overall cryptocurrency market.
Why AI Tokens Reacted
AI-related cryptocurrencies are heavily influenced by Nvidia’s performance because the company’s GPUs are integral to AI and blockchain development. Previous market events, such as Nvidia’s one-day market value drop in September, have similarly affected AI tokens.
The uncertainty surrounding Nvidia’s legal challenges could further impact AI tokens and the broader crypto ecosystem in the coming weeks.
What’s Next for AI Tokens?
Despite the current downturn, analysts suggest that AI tokens could rebound if Nvidia successfully navigates the anti-trust probe. Additionally, future macroeconomic events, such as the upcoming U.S. Consumer Price Index and FOMC meeting, may influence investor sentiment and provide new opportunities for growth.
Final Thoughts
The Nvidia anti-trust investigation underscores the vulnerabilities within the AI token market and its dependency on external factors. While the current slump is significant, it also presents a potential entry point for long-term investors who believe in the future of AI and blockchain technology.
