While the crypto industry today isn’t as reliant on computing power as it was during its inception, a strong link persists between the two. Unsurprisingly, unfavorable news from a major processing company negatively impacted the values of numerous altcoins during late afternoon trading on Wednesday.
It was a case of guilt by association, and few managed to avoid the market’s harsh judgment. At that particular moment, utility crypto Polkadot (-1.18%) experienced a decline of nearly 6%, while smart contract platform token Solana (-2.04%) fared slightly worse, dropping by almost 7%. Meme token Shiba Inu (1.73%) fell by a relatively modest 3%, and Bitcoin hard fork currency Bitcoin Cash (0.42%) decreased by 4%.
Processing the Latest Developments from a Peer
For better or worse, the crypto scene has long been linked with advanced graphics processing units (GPUs) produced by Nvidia, the industry’s dominant force. Thus, significant developments involving Nvidia often influence the sentiment and direction of the altcoin market.
On Wednesday, Nvidia had the audacity to release second-quarter results that didn’t entirely surpass analyst estimates or investor expectations. Yes, revenue more than doubled year over year, and net income nearly tripled, but the company’s gross profit margin saw a slight sequential decline. Clearly a victim of excessively high expectations, Nvidia’s shares dipped by a few percentage points in after-hours trading and seemed determined to remain there.
It’s crucial to highlight that while several leading coins in the market utilize the proof-of-work (PoW) model dependent on GPUs — with Bitcoin being a prime example — most new cryptocurrencies tend to favor proof of stake (PoS). This latter method involves a kind of random validation process that is far less reliant on raw computing power and speed.
The altcoin declines on Wednesday were concentrated within a narrow range in the mid-single-digit percentages. This suggests that many investors do not differentiate between PoW cryptos (such as Bitcoin Cash) and those opting for PoS (like Shiba Inu).
Discount Hunting to Commence in 3, 2, 1…
Considering that the altcoin downturn seems to be driven more by unfounded concerns than by any substantive issues, I don’t expect it to persist. I anticipate a kind of rebound within days as crypto enthusiasts regain their composure and begin searching for bargains once more. Even for the processor-dependent PoW cryptocurrencies, Nvidia’s results were actually quite positive and promising. This market is unlikely to remain in the doldrums for long.
