Bitcoin or Nvidia: Which asset is set to dominate the next decade?

Putting bitcoin side-by-side with assets from other classes always seems like an unfair matchup, with Bitcoin dominating the gains column like it did in 2023 — compared to other assets.

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However, Nvidia emerged as a worthy challenger, not only rivaling, but surpassing Bitcoin’s impressive gains with the asset going up more than 200% last year! 

Nvidia Corp and BTC historical data analysis

Both assets have undergone significant transformation, stunning analysts with their before-and-after pictures. Just five years ago, Nvidia stock struggled to reach USD 54, while the company was forced to revise its earnings guidance downward from USD 2.7 billion to USD 2.2 billion. This decline was spurred by waning demand for gaming GPUs and turbulence in the cryptocurrency market for miners.

Nvidia CEO Jensen Huang voiced frustration over the sporadic and unpredictable nature of significant purchase orders. He described Q4 2018 as a “real punch in the gut”, employing terms like “unusually turbulent” and “disappointing quarter”— terms that are uncommon for him to use today. 

Bitcoin also had its tribulations back in 2019. Beyond enduring a steep decline amid a harsh crypto winter, a widespread Chinese crackdown on all crypto businesses cast doubt on the legitimacy of the asset class, as per analysts’ observations at the time. Regulatory turmoil also ensued in the United States, with the IRS categorising Bitcoin as property and the Commodity Futures Trading Commission (CFTC) treating it as a commodity.

Moreover, the introduction of the first Bitcoin futures contracts on the Bakkt platform received a lackluster response, failing to bolster the asset price.

Bitcoin and Nvidia Corp performance today

In just five years, Nvidia has become one of the hottest properties in the investing scene, breaching the coveted USD 1 trillion market cap. The company’s Q4 2023 earnings report dominated news cycles, with Nvidia achieving a staggering USD 22.1 billion — a significant 22% increase from the previous quarter. The stock price also surged, reaching a new high above USD 800 per share. Some analysts are even calling Nvidia the “most important stock on earth.”

Fueled by the surge in generative AI, Nvidia has risen to the challenge by manufacturing best-in-class GPUs. Their H100 GPUs, the workhorses of generative AI, are in high demand, with thousands ordered despite the hefty USD 30,000 price tag. This rapid growth is a clear sign of Nvidia’s dominance in this critical area of AI development. 

Bitcoin, on the other hand, has been on the rise since late last year and has picked up the pace since the turn of the year. This rally follows a significant downturn caused by the FTX collapse and legal troubles surrounding Binance co-founder, Changpeng Zhao. Bitcoin is now hovering near its all-time high of USD 68,900, with analysts predicting a decisive break above this level imminently.

Buoyed by the SEC giving the nod to Spot Bitcoin ETFs from top financial institutions, and the hot anticipation ahead of April’s halving event, some analysts expect bitcoin to touch highs of USD 100,000 in 2024.

With the before and after picture laid out, what could the next decade look like for both assets and which one could come out on top?

The bearish argument: Will Nvidia stock go down?

While the two may be jacked at the moment, there are analysts poking holes at the potential growth of the assets. Head of financial analysis at AJ Bell, Danni Hewson believes that investors should define their risk before going heavy into Nvidia stock.

“At the moment, it’s going from strength to strength - but, as with all companies showing this kind of stellar growth, there is a ceiling somewhere, and investors need to be careful that they in their minds know what that ceiling is for them.”

Others like Andrew Merricks, portfolio manager at IDAD funds, called for caution while selecting the stock - terming it a “bubble”. 

“Nvidia has to be a bubble. It’s not sustainable. It can’t be. However, anything connected to AI is a good long-term investment.”

Bubble or not there are legitimate bearish concerns going forward, such as the ability of the company to keep up with orders — considering the supply side hiccups of mid-2023. Though Nvidia has made decent sales when it comes to its gaming and crypto-mining chips, its main money maker is the AI chip.  There are also concerns about a possible dip in demand for AI chips, especially after the recent ban prohibiting the sale of US chips to China. 

Bitcoin’s fast-paced growth may soon flatten according to some analysts who think that the price is at a strong resistance region and that the demand for bitcoin ETFs may slow down soon despite the record inflows observed at Blackrock. 

The bullish argument: Will the uptrend continue?

Amidst predictions of a slowdown in AI chip demand down the line, Nvidia is proactively ramping up its innovation efforts to maintain its competitive edge. The company is gearing up to unveil consumer-centric graphics cards designed to facilitate AI applications on desktops and smartphones.

These upcoming cards are poised to streamline the customisation of generative AI, with the impending chipset expected to accelerate the creation of AI-generated videos by 1.5 times and images of 1.7 times. With such strategic initiatives underway, Wall Street analysts like Vijay Rakesh are optimistic about Nvidia’s revenue potential, projecting a staggering USD 300 billion in revenue by 2027.

Bitcoin analysts are painting an optimistic picture as the current bull-run cycle progresses. With the impending halving event on the horizon, analysts anticipate a scarcity mindset among buyers, who are expected to fervently add more Bitcoin to their portfolios. 

Moreover, the recent record inflows into Blackrock’s Spot Bitcoin ETF, following substantial inflows of approximately USD 778 million worth of BTC into IBIT, further bolster confidence in Bitcoin’s upward trajectory. This influx of institutional capital underscores the growing acceptance and adoption of Bitcoin within traditional financial circles, fuelling expectations of continued price appreciation in the near term.

This is an indicator of increasing institutional interest as the spot ETFs become “a significant factor in bitcoin’s price discovery”, according to Vetle Lunde, a senior analyst at K33.

Anticipating the road ahead

These assets could be set for exponential growth over the next decade. As to which one could be worth more in 10 years, it will depend on each asset’s resilience during bear cycles and their reaction to market conditions along the way. 

Bitcoin could keep pumping until it runs into more regulatory hiccups, as governments and central banks grapple with how to deal with it. Nvidia on the other hand, could feel the burn in case market conditions change for the worse, and the AI arms race leads to significant restrictions by important countries such as the United States and China. 

As for now, you can get involved and speculate on the price of these two incredible assets with a Deriv MT5 account.  It offers a list of technical indicators that can be employed to analyse prices. Log in now to take advantage of the indicators, or sign up for a free demo account. The demo account comes with virtual funds so you can practise analysing trends risk-free.