While one can't directly link the cryptocurrency rally to the boost in these two tech stocks, it's certainly plausible that it helped.
NVDA stock rallied 1.44%, while AMD stock climbed 1.85% on Thursday. Bitcoin prices though? They soared. At 11 a.m. ET, Bitcoin was trading at $2,357. By 2 p.m. the cryptocurrency was more than $2,600. The 13% rally in three hours wasn't enough, though. Bitcoin eventually climbed above $2,900 before falling back some. On global exchanges, prices are currently hovering near $2,770.
On Friday, shares of Nvidia initially opened lower but quickly turned to positive territory. Up almost 1% to $169.13, shares were near session highs. Likewise, AMD opened lower on the day too, but quickly shot up 1.6% to $14.02 and was also trading at session highs.
The rally in Bitcoin comes alongside government agencies taking down two of the dark web's biggest illegal online markets: AlphaBay and Hansa. Bitcoin and cryptocurrencies were a big part of the transactions that took place on these sites. But with cryptocurrencies branching out and becoming more mainstream, the demand remains robust. That's indicative by the price of Bitcoin.
More importantly, though, BIP 91 -- the Bitcoin Improvement Proposal -- rather suddenly has the support of more than 90% of miners. There were several proposals out there, but in a nutshell, BIP 91 is a way for the Bitcoin community to scale up the size of its market. This is being viewed as positive news by miners and investors.
Bringing it back to the stock market, this could be good news for Nvidia and Advanced Micro Devices. The companies make the necessary components required for the high-powered computers that mine Bitcoin. As demand for cryptocurrency continues to increase, the theory is that demand for AMD and Nvidia products will increase as well.
Because these companies have far larger business segments, though, drawing an exact correlation between the currencies and the stocks is rather difficult. But it is something investors should be aware of.
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This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.