The AI tokens market drops 14.6% as Nvidia faces an anti-trust probe in China

The market for AI-related cryptocurrencies experienced a sharp downturn, with a 14.6% drop in total market cap over the course of a single day, primarily driven by news of an anti-trust investigation into Nvidia, the leading maker of AI chips. This investigation was launched by China’s State Administration for Market Regulation, and it alleges that Nvidia violated the country’s anti-monopoly laws. The probe is particularly significant because Nvidia’s 2020 acquisition of the Israeli chip designer Mellanox Technologies is said to have breached the terms of commitments made to Chinese regulators.

As a result, AI-related cryptocurrencies took a significant hit. The largest AI coin by market capitalization, Near Protocol, saw a drop of over 8.6%, with its price trading at $6.65 at the time of reporting. Other major AI tokens, such as Render, Akash Network, FET, and The Graph, also experienced substantial losses, each falling between 8% and 9.7% in just one day. Even lesser-known tokens in the AI space, including Bittensor, Arkham, Livepeer, and Flux, faced even steeper declines, with losses ranging from 12% to 16%.

The broader market sentiment surrounding AI coins has been highly sensitive to any negative news involving Nvidia. The chipmaker, which is integral to the development of AI technologies, derives around 15% of its revenue from Chinese customers. The news of the investigation had an immediate negative impact on Nvidia’s stock price, which fell by 2.55%, closing at $138.81 on Tuesday.

This is not the first time that Nvidia-related news has caused turbulence in the AI crypto sector. Previously, on September 4, a similar event took place when Nvidia’s stock experienced a major drop due to a subpoena from the U.S. Department of Justice regarding antitrust concerns. On both occasions, the AI tokens reacted with double-digit percentage losses, reflecting their strong correlation to Nvidia’s performance in the market.

In addition to the Nvidia news, the AI token market was also negatively affected by a broader market downturn. On December 10, Bitcoin experienced a sudden flash crash, briefly dropping below $95,000 from a high of $100,200 the previous day. This sharp decline triggered a broader market sell-off, with the overall crypto market falling by 6.8%. The crash resulted in more than $1.7 billion worth of liquidations across the crypto market.

As a result of these combined factors, the total market cap of AI-related cryptocurrencies fell to $40.56 billion. This represents a significant loss for the sector, and the ongoing investigation into Nvidia, coupled with the broader volatility in the crypto market, may continue to put pressure on these AI-focused assets in the near term.