Here is the Wall Street Journal's take on the bitcoin bubble:
https://www.wsj.com/articles/why-bitcoins-bubble-matters-1507515361Ask most people about the bitcoin bubble, and they’ll probably have the same reaction: It’s interesting, but it won’t affect me. After all, they’ll figure, they aren’t investing in bitcoin, so if there is a bubble, and it does burst, they’ll be just fine.
Well, maybe they should start worrying.
The market for cryptocurrencies—digital tokens used to transfer money between individuals’ computers with minimal fees—has grown in stature in recent years and is increasingly entwined with broader financial markets as well, a trend that is likely to continue. Bitcoin is now traded by some of the institutional investors around which bond and stock markets revolve. The Wall Street Journal has reported that Goldman Sachs Group Inc. GS -1.22% is considering opening bitcoin-trading operations. Cryptocurrencies also are being used to raise capital by more companies.
As the bubble grows, analysts say, a crash has a greater chance of affecting investor sentiment about stocks, especially in the technology and financial sectors.
“Any product that blows up, there’s always collateral damage,” says Joe Kinahan, chief market strategist at brokerage TD Ameritrade . Tech and financial “companies who are relying on it for business, and those who have put a significant investment into the [blockchain] infrastructure would be the first” to suffer collateral damage, Mr. Kinahan says.
What has some market observers concerned is that in less than six months, bitcoin went from around $1,000 a token to $5,000. It is back now to $4,400. But in early 2016, bitcoin was trading at less than $400, bringing its 18-month gain to 1,000%. Consider that the math-based currency has yet to find a widespread use outside of speculation, and warnings of an implosion from J.P. Morgan Chase Chief Executive James Dimon and others in the financial establishment sound like more than curmudgeonry.
...Nvidia vulnerable
A crash in the price of leading cryptocurrencies would almost certainly hurt shares of Nvidia Corp. NVDA +2.86% , the chip maker that was the biggest percentage gainer on the S&P 500 in 2016, and its rival Advanced Micro Devices Inc., at least temporarily. Both companies have noted in their quarterly filings that cryptocurrency miners are a key source of demand for their graphic chips. Sales of chips to cryptocurrency sources represented 6.7% of Nvidia’s fiscal second-quarter revenue of $2.23 billion.
“Anybody getting more than 5% of their business from crypto, it’s starting to become significant and you could see their stock prices very quickly collapse” in the event of a bubble bursting, says Mr. Kinahan.
Spokesmen for Nvidia and AMD declined to comment for this article.
Other companies at risk include those in financial technology, or “fintech,” one of the hottest parts of the tech sector. Shares of the exchange-traded fund Global X FinTech (FINX), a basket of such stocks, are up 43% in 2017.
