Options Jive

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Crypto-Currency's Rise

Options Jive

For today’s segment of Options Jive, Tom and Tony talk about cryptocurrencies and how their recent rise might have a correlation with technology companies such as NVIDIA and AMD. Cryptocurrency is a digital or for better words a virtual currency. The defining feature of cryptocurrency is that it is not issued by a central authority making it hypothetically unaffected by government interference or manipulation.

Over the last five years, the most popular cryptocurrency Bitcoin has risen in value from about $10.00 a coin to $3000 a coin. Bitcoin value, although not directly regulated by any government, has fluctuated from global events such as the Mt. Gox exchange collapse and Brexit. The last several months have shown an unprecedented run-up in value, and our best explanation is Bitcoin: hype, familiarization, and scarcity. Another explanation might lie in Bitcoin’s relationship with NDVDIA and AMD.

The one-year price change in Bitcoin has coincided with a rise in NVDA and AMD. We would expect this behavior because NVIDIA and AMD create processing chips used to produce cryptocurrencies. As crypto-currencies rise, the cost of the chip and power to run them build an arbitrage opportunity.

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