Volatility roils market

Bitcoin was rebounding as the sun came up on the East Coast after an unsteady weekend stretch in which it slid to below $74,000, its lowest level in eleven weeks.

De-risking inclinations took hold on Sunday as investors tried to process a growing international espionage controversy involving Nvidia CEO Jensen Huang. Reports of a diplomatic dead end in the Middle East did not help instill much bullish sentiment either.

At its lowest point overnight, BTC fell to $73,706, according to CoinGecko. As of 7:33 a.m. (EST), the biggest crypto changed hands at a spot price of about $74.8K. The back-and-forth swing spawned $1B worth of forced selling in leveraged futures positions, according to CoinGlass. Traders betting bullishly accounted for the bulk of that liquidation total. “The market punished long traders,” CoinDesk said, “reminding them why leverage can hurt.”

In a pre-market spasm, Nvidia shares tumbled 5% after investors learned yesterday that the chip company’s board had initiated an investigation into CEO Jensen Huang over his relationship with a female business executive — one believed to be a Chinese spy.

On Sunday, Huang, the face of the AI boom and an absolute rock star in the technology world, conceded via an email to employees that he did have an extramarital affair. “There is no excuse for what I did,” the 63-year-old said. “I am deeply sorry."

The Taiwanese-born Huang added that he is committed to “protecting Nvidia and supporting America's national security.”

His paramour, the woman at the heart of this scandal, per U.S. intelligence reports, is Alice Huang.

(Huang is a surname shared by 6% of the Taiwanese population. They are not related.)

Alice Huang (also referred to as Huang Le) is a top executive at Megaspeed International, a Singapore-based data center company. 

According to the New York Times, U.S. intelligence agencies have concluded she was recruited by Chinese intelligence to gather information on the Nvidia CEO and potentially influence Nvidia's chip sales. In the past, Megaspeed has been accused of helping Chinese firms obtain Nvidia’s most advanced chips which are supposed to be off limits under U.S. trade policy.

A black eye for the head of the company at the center of the AI juggernaut is hardly what investors needed after last week’s bruising week for the Nasdaq which is now 10% below last month’s record high.

Nvidia's board announced its independent investigation on Sunday afternoon right after Jensen Huang sent the email acknowledging the affair. The probe will be handled by an independent committee of the board with help from outside legal counsel. A Congressional probe probably isn’t far off, some analysts theorized.

Nvidia stated it has "no reason to believe that either national security or Nvidia secrets were compromised" and claimed it was previously unaware of specific U.S. intelligence concerns regarding Megaspeed.

The Ethereum network should focus on promoting ETH primarily as a store of value, as opposed to treating it as a mechanism for burning off gas fees, said co-founder Vitalik Buterin.

Buterin was weighing in on the topic of optimizing ETH for fee burning purposes in the wake of a recent proposal to burn a rising share of validator rewards as more ETH gets staked, The Block said. The proposal was withdrawn last month after heavy pushback.

Buterin further argued that optimizing ETH for fee burn would require large protocol spending and active governance that run counter to Ethereum’s main goals: decentralization, censorship resistance and privacy.

He said Ethereum should keep burning part of every transaction fee. But if the burn stays below 10% of breakeven indefinitely, holders “should not feel sad.”