By David Meyer
October 9, 2017

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.

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