Bitcoin (BTC) Price Churns Around $104,000 as Crypto Mining Stocks Soar on AI Demand

Crypto mining and data center firms such as Cipher Mining (CIFR), Hive Digital (HIVE), Hut 8 (HUT) and TeraWulf (WULF)

Crypto mining and data center firms were in the spotlight on Friday as optimism about artificial intelligence (AI) computing demand, fomented by CoreWeave's (CRWV) massive deal with ChatGPT developer OpenAI, buoyed their stocks, while Galaxy Digital (GLXY) began trading on the Nasdaq.

What Happened

CoreWeave's stock price soared by more than 26% after disclosing a $4 billion partnership with OpenAI for providing AI computing power.

The partnership will see CoreWeave's data centers support OpenAI's large language models (LLMs), which are used in applications like ChatGPT.

This partnership signals the growing demand for data center capacity to support AI workloads.

Among the miners and data center firms that were showing strength were Cipher Mining (CIFR), Hive Digital (HIVE), Hut 8 (HUT), and TeraWulf (WULF), which booked 10%-20% gains.

These firms are often viewed by market participants as proxies for infrastructure bets linked to AIs.

For its part, Galaxy Digital saw its shares rise by 8% as it commenced trading on the Nasdaq, marking the long-awaited U.S. market debut for the firm.

The company, which is already listed in Toronto, manages crypto investments, trades digital assets, and also has a data center business.

Its shares have dropped sharply this year due to the downturn in digital assets and a probe by the U.S. Securities and Exchange Commission.

However, they rebounded somewhat this week after a U.S. judge rejected a settlement proposal between the SEC and Ripple (CRYPTO: XRP).

Coinbase (NASDAQ:COIN) shares also rebounded by 9% after a sharp drop on Thursday that was triggered by customer data breach and ongoing regulatory scrutiny by the SEC.

DeFi Development (NASDAQ:DFTC) shares surged by 45% to reach fresh record highs on news that it had struck a validator operation deal with memecoin BONK and was planning to add more Solana (CRYPTO: SOL) tokens to its treasury.

The company, which integrates real estate technology with a Solana treasury strategy, is focusing on memecoins and lending protocols within the Solana ecosystem.

On the other hand, BTC price moved up slightly, rising by 1.3% over the 24 hours to trade above $104,000. Meanwhile, ether rose by 2.3% to reach $2,580.

The broad-market CoinDesk 20 Index was flat, while XRP slipped as a U.S. judge rejected the proposed settlement between Ripple and the SEC.

The judge's decision to reject the proposed settlement could have implications for the legal battle between the SEC and crypto firms.

The latest developments in the case are unfolding as the U.S. Congress prepares to return from summer recess and begin deliberations on crypto legislation.

The House of Representatives passed a comprehensive crypto bill in June, setting the stage for the Senate to consider its own version of the legislation.

The Senate Banking Committee has held several hearings on crypto issues this year, focusing on topics such as stablecoins, DeFi, and the role of the SEC in regulating digital assets.

The outcome of the legislative process remains uncertain, but it could have a significant impact on the future of the crypto industry in the U.S.

The University of Michigan's latest survey showed that consumers expect 1-year inflation to rise to 7.3%, up from 6.5%, and reached the highest levels since the 1980s.

Expectations for 5-10 years later ticked up to 4.6%, hitting multi-decade highs.

"It's so high it doesn't make sense," Louis Navellier, chief investment officer of money management firm Navellier said in a market note.

Responses showed staggering divergence in outlooks by political affiliations, with the Republican outlook for far tamer inflation.

Traditional markets, consequently, shrugged off the data, with major U.S. stock indices climbing higher towards the latter hours of the session.

However, rising inflation expectations may have a second-order impact on markets by discouraging Fed policymakers from cutting rates in the next months.

"The concern here is that the Fed has expressed interest in consumer expectations on inflation, and with their concern about the potential of tariff-fueled inflation, it may give them further reason to pause," said Navellier.