A Bitcoin Crash Could Really Punish These Stocks

Graphics chip firms, for one.

Chipmakers Nvidia and Advanced Micro Devices would be likely to see their stock prices suffer if the bitcoin market were to collapse, brokerage TD Ameritrade has said.

The question of whether bitcoin is in a bubble or not is one that continues to rage across the tech and financial worlds, particularly after a tumultuous year in which the cryptocurrency more than quadrupled in value—with some bumps along the way. Bitcoin started to crash last month largely due to a negative regulatory outlook in China, but mostly recovered and currently trades at $ 4,600 to one bitcoin.

However, with the virtual currency mostly still being used by speculators rather than regular users, a crash could still come. On Sunday, The Wall Street Journal looked into where the risks lie, and Joe Kinahan, TD Ameritrade’s chief market strategist, predicted “collateral damage” to more than just bitcoin investors themselves.

Nvidia nvda and AMD amd are exposed because they make graphics processors, which are heavily used in the bitcoin “mining” industry. As bitcoin has taken off, the industry has come to represent a significant slice of graphics-processor sales—6.7% of Nvidia’s Q2 revenues, for example.

“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,” Kinahan said. He also pointed out that bitcoin’s heavy, speculation-led fluctuations in value make it more difficult to use for regular transactions—thereby making it even more of a speculator’s game.

The article also suggested that financial technology firms could suffer if bitcoin were to crash. However, while many fintech startups and larger banks are investing a lot in blockchain technology, which underpins bitcoin, the technology in no way depends on bitcoin, so the fallout would likely be limited.

What would really make bitcoin dangerous to the wider market? Bitcoin exchange traded funds (ETFs), for which the WSJ‘s interviewees saw great demand. “You’re going to put a derivative on a derivative of an unregulated asset?
That, to me, is a recipe for disaster,” said Themis Trading’s Joe Saluzzi in the piece.

Tech

These were the 10 biggest European tech stories this week

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This week, Tech.eu tracked 18 technology M&A transactions and 58 funding deals (totalling €181 million) in Europe and Israel. You can subscribe to our newsletter below to receive all this information in your inbox every Friday afternoon for free, but here’s an overview of the 10 biggest European tech news items for this week:

1) There were as many as four funding rounds in Europe and Israel north of $ 10 million: Blippar ($ 54 million), XJet ($ 25 million), iAngels ($ 14 million) and Replay Technologies ($ 13.5 million).

2) There were also three relatively large acquisitions involving Israel-based companies: Cisco bought Leaba Semiconductor for $ 380 million, SES PS paid $ 242 million for RR Media, and RNTS acquired ad tech company Inneractive for $ 72 million

3) Spotify’s fundraising rumours continued: TPG in talks to invest $ 500 million in Spotify in a convertible debt round that could rise to $ 1 billion

4) Raspberry Pi 3 has been officially launched; and here are co-founder Eben Upton thoughts on the new device

5) The US and EU presented Privacy Shield, a regulatory framework that will replace the old Safe Harbour agreement. Fortune has a good breakdown of how this will affect US-based tech companies

6) It was a busy week for Facebook in the regulatory and fiscal environment in Germany and the UK, respectively

7) Various Rocket Internet-backed startups announced pullback on ambitious expansion plans: Tripda shut down, Delivery Hero is leaving China and EatFirst is to cease operations in Berlin.

8) Britain’s tech sector is overwhelmingly opposed to Brexit; and this is how it could impact the UK’s startup scene

9) Bill Maris explained the changes in Google Ventures’ European strategy

10) Zalando’s revenue grew by 33.6 percent in 2015, reaching €2.2 billion

Bonus link: The father and son VCs behind the new LocalGlobe seed fund (video interview)

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This story originally appeared on Tech.eu.


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