NVIDIA's $465 Billion Market Cap Plunge Deemed an Overreaction by Fundstrat's Tom Lee, Presents Buying Opportunity

On Monday, NVIDIA faced a historic drop, losing a staggering $465 billion in market cap in just one day. Tom Lee, the head of Fundstrat Research, called this market reaction an "overreaction."

He pointed out that the U.S. markets still look strong. In fact, bitcoin has been outperforming small-cap stocks and financials this year.

During his appearance on CNBC, Lee discussed the situation. He believes that the double-digit drop in NVIDIA (NVDA) presents a fantastic buying opportunity, similar to the best chances seen since the COVID outbreak. "Markets don’t like uncertainty. To me, it’s an overreaction, and this overreaction will be a great opportunity for investors,” he stated.

So far, Lee's perspective seems to be holding up. After the Nasdaq dropped by 3% and NVIDIA fell by 17%, Nasdaq futures are now up by 1%. Meanwhile, NVDA has risen by 5% in pre-market trading.

This sell-off in NVDA marks the largest single-day market cap loss ever, according to Bloomberg data. Bitcoin (BTC) dipped to $97,500 on Monday but has bounced back above $103,000. It had reached as high as $105,000 before news broke about AI China's DeepSeek. This price point is what bulls will likely aim to reclaim soon.

AI bitcoin miners also took a hit, with losses up to 30%. Core Scientific (CORZ) is showing slight recovery in pre-market trading.

Lee also highlighted a healthy market structure in U.S. equities, noting that bitcoin has outperformed small-cap stocks and financials year-to-date. Now, all eyes are on the Federal Reserve's policy meeting on Wednesday. A pause in the federal funds rate at the 4:25-4:50 range is largely expected. Lee expressed some uncertainty going into the meeting, suggesting that the markets might be too hawkish and focusing too much on a potential rate hike in 2025.

James Van Straten works as a Senior Analyst at CoinDesk. He specializes in Bitcoin and its connection to the macroeconomic landscape. Previously, he was a Research Analyst at Saidler & Co., a Swiss hedge fund, where he gained valuable experience in on-chain analytics. Now, he monitors flows to understand Bitcoin's role in the broader financial system. Additionally, he advises Coinsilium, a publicly traded company in the UK, on their Bitcoin treasury strategy. He also holds investments in Bitcoin, MicroStrategy (MSTR), and Semler Scientific (SMLR).