The sudden resignation of Nvidia Chief Executive Officer Jensen Huang is sending ripples through global financial markets. Following the November 12 announcement, AI-related stocks were sold off across the board, accelerating the flight from risk assets. In the cryptocurrency market, total market capitalization fell by $215 billion in 48 hours, dropping below $2.4 trillion for the first time in three months. Gold also fell about 3% to $3,882.50 per troy ounce, entering its lowest range in about a year.
Nvidia announced on the 12th that Huang, who had led the company for 33 years since co-founding it in 1993, had stepped down as CEO and director effective immediately. Chief Financial Officer Colette Kress will serve as interim CEO until a successor is named. The company's shares plunged nearly 12% at one point after the announcement. In the first 30 minutes of trading, retail investors bought about $111 million, but hawkish comments from monetary officials and rising crude oil prices also weighed, and all three major U.S. stock indexes closed lower on the day.
Note: Gold change is from the Huang resignation announcement through the 13th. Stock indexes are compared with the prior day's close on the 12th.
The cryptocurrency decline is more severe than in the stock market. Bitcoin (BTC) fell below $70,000 on the 12th and dropped to $71,381 on the morning of the 13th. Ethereum (ETH) also broke through the $2,000 level seen as a downside target and is trading around $1,920. U.S. spot Bitcoin exchange-traded funds (ETFs) saw outflows for five consecutive trading days, with cumulative net outflows reaching about $1.44 billion. On the 11th alone, $299.9 million flowed out, and $269.7 million left BlackRock's iShares Bitcoin Trust (IBIT), which had been driving institutional demand.
In the derivatives market, forced liquidations of leveraged bets on price gains swelled. Bitcoin open interest (OI) on Binance fell about 17% in less than a month, from $10.6 billion to $8.8 billion, dropping below its 180-day moving average. In the 24 hours through the 13th, about $745 million in positions were liquidated, of which longs accounted for about $630 million. In June, a similar deleveraging was followed by Bitcoin rising 45% from below $60,000 to over $87,000, and some hope the supply-demand adjustment is ending. But this time, spot demand has not filled the gap left by deleveraging, and any rebound is likely to be limited.
Monetary policy is also a headwind. U.S. October consumer price index (CPI) rose 0.4% month-on-month, exceeding the market forecast of 0.3%, and core CPI also came in at 0.3% versus an expected 0.2%. According to CME Group's FedWatch, the probability of a Federal Reserve (FRB) rate hike in December jumped from 78% at the start of the week to 100%, with some even pricing in a 0.50 percentage point increase. Cleveland Fed President Hammack said that "raising rates in smaller increments more frequently and gradually would be easier for businesses and households to handle," while San Francisco Fed President Daly also said additional rate hikes are likely to be necessary. In the market, the dollar hit a roughly 19-month high against major currencies, weighing on the relative appeal of non-interest-bearing gold and cryptocurrencies.
Uncertainty over the Middle East situation is also chilling investor sentiment. President Trump's stance that a deal with Iran is unnecessary dampened hopes for peace, and crude oil prices rebounded. WTI rose to $88.74 a barrel and North Sea Brent to $95.82, both higher. The energy stock index rose for a fourth straight session, the biggest gain among the S&P 500's 11 sectors. Meanwhile, weekly statistics from the U.S. Energy Information Administration (EIA) showed crude inventories rose about 4.66 million barrels from the prior week to 414.42 million barrels, with 3.3 million barrels added along the Gulf Coast alone. However, inventories remain about 3.08% below year-earlier levels, leaving limited supply cushion.
Market focus now shifts to Nvidia's third-quarter earnings scheduled for the 17th and the new management team's strategy. As a test of the sustainability of the AI rally, earnings without Huang will be a litmus test. In the cryptocurrency market, $70,000 is seen as the next line of defense; a break below could extend losses to $68,000 and then the $67,000 range, where the 200-week moving average sits. A reversal would likely require a recovery to $75,700—the average acquisition cost for short-term holders—and a return of funds to spot ETFs. If Anthropic's large initial public offering (IPO) draws demand as planned, it could help restore risk appetite, but many believe that unless the supply-demand gap is filled, the correction will remain a lull until the next shock.
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