From affair to market crash: How the Nvidia scandal hit Bitcoin

​Bitcoin fell below $74,000, while liquidations across the crypto market exceeded $1 billion. The panic was triggered by revelations of an extramarital affair involving Nvidia's CEO. At first glance, the situation seems to have nothing to do with cryptocurrencies, but the underlying problem is far more serious.

A love affair with a Chinese connection

On Sunday, November 8, Nvidia CEO Jensen Huang admitted to having an extramarital affair. The woman involved was Alice Huang, a former senior executive at Singapore-based cloud computing company Megaspeed. U.S. intelligence agencies suspect her of working for Chinese intelligence and passing information to Beijing.

According to Reuters, Nvidia's board of directors announced an independent investigation into a possible attempt by foreign intelligence to gain access to the company's secrets. Huang apologized to his family and employees, took responsibility for his actions, and pledged to cooperate with the investigation. Nvidia emphasized that it currently has no evidence that confidential information was compromised.

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The suspicions go beyond the personal relationship. Megaspeed is an Nvidia partner that provides access to powerful AI chips, including the H100 and GB200. U.S. authorities suspect the company of helping supply advanced processors to China in violation of export restrictions. The scandal has already attracted attention in the U.S. Congress, where lawmakers have demanded explanations from Huang. President Donald Trump, meanwhile, has publicly defended Nvidia's CEO.

The news hit Nvidia even before U.S. stock exchanges opened. On Sunday, Nvidia perpetual futures on the crypto trading platform Hyperliquid fell 3.8% to $180. Tokenized Nvidia shares, traded as NVDAX, also lost around 3.6%.

Why Bitcoin suffered from Nvidia's troubles

On the same day, Bitcoin briefly fell below $74,000 for the first time since August. Ethereum suffered an even sharper decline, dropping below $2,100. According to CoinGlass, more than $1 billion in leveraged crypto positions were liquidated over 24 hours. Of that amount, $913 million came from bets on rising cryptocurrency prices. Ethereum alone accounted for $448 million in liquidations, compared with $272 million for Bitcoin.

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But what does Nvidia's CEO's personal life have to do with cryptocurrencies? The answer is that investors often treat Bitcoin as a risk asset, much like technology stocks. When uncertainty rises in financial markets, they reduce their exposure to both stocks and cryptocurrencies. Nvidia has become one of the main symbols of the artificial intelligence boom, so threats to its business can unsettle investors far beyond the stock market.

There is another reason. The scandal erupted on Sunday, when U.S. stock exchanges were closed. Cryptocurrencies, however, trade around the clock. Investors looking to reduce their exposure to risk could therefore sell Bitcoin and Ethereum immediately rather than wait for Wall Street to open. Crypto platforms also offered instruments linked to Nvidia shares, allowing traders to react directly to news about the company.

Leveraged trading added further pressure. Many traders borrow funds to increase their potential profits. But when prices fall, exchanges automatically close positions if traders no longer have sufficient collateral. These forced liquidations create additional selling pressure and can trigger another wave of declines. This mechanism helped turn the initial negative reaction to the news into a broader cryptocurrency sell-off.

Why the market was so vulnerable

The Nvidia scandal broke at a time when investors were already worried about further declines in the technology sector. Over the previous week, the Nasdaq had lost nearly 5%, extending its losing streak to four consecutive weeks. Market participants have increasingly questioned whether the enormous sums being spent on artificial intelligence will generate returns quickly enough. Nvidia's market capitalization, which approached $5.8 trillion in October, had fallen below $5 trillion by early November.

Geopolitical tensions were also rising. U.S. Secretary of State Marco Rubio said negotiations with Iran had stalled, describing Tehran's demands as unacceptable. For investors, this meant continued risks of further escalation in the Middle East and another increase in oil prices. Higher oil prices could intensify inflationary pressures and complicate interest rate cuts, creating an unfavorable environment for risk assets, including cryptocurrencies.

The possibility of tighter U.S. restrictions on AI chip exports to China has created additional uncertainty. Republican lawmakers are already demanding explanations from Huang, while Democratic Senator Elizabeth Warren wants him to testify before Congress.

One scandal, many consequences

The cryptocurrency sell-off was not caused by the extramarital affair itself, but by the scandal's potential consequences for Nvidia and investor sentiment. The controversy engulfed one of the world's most influential technology companies, raising concerns about the future of the AI industry. Meanwhile, the crypto market proved particularly vulnerable because of round-the-clock trading and the large number of speculative positions using leverage.

However, it would be a mistake to blame Bitcoin's entire decline solely on Jensen Huang's troubles. Cryptocurrencies were already under pressure from the sell-off in technology stocks and rising tensions in the Middle East. The scandal provided an additional trigger, highlighting how strongly Bitcoin depends on sentiment in global financial markets and how quickly negative news can escalate into a wave of large-scale liquidations.