Retail investors, once the driving force behind Nvidia’s meteoric rise, appear to be exiting the stage at least for now. According to a new report by Vanda Research, retail investors sold off $258 million worth of Nvidia stock in the week ending June 4, marking a dramatic sentiment reversal after months of aggressive buying. While institutional demand for Nvidia remains steady, smaller investors are now seeking new opportunities raising speculation about a potential rotation into crypto assets.
Retail Sentiment Turns Bearish
The shift in sentiment is sharp and data-backed. Vanda’s latest retail sentiment tracker shows a decline from a 10-point bias to buy Nvidia to over a 15-point bias to sell in 2025. This lines up with Sherwood’s report noting $4.9 billion in retail outflows from Nvidia during mid-May the stock’s largest weekly dollar outflow since 2015. The two-week streak of retail selling was the longest since March 2022.
The shift isn’t just limited to Nvidia. Tesla, another retail darling, is also experiencing a wave of sell-offs. Analysts suggest that many investors who profited from Nvidia’s gains between 2023 and 2024 are now locking in those profits and exploring riskier, potentially higher-upside bets.
Is Crypto Next?
Some of that money could be heading toward the cryptocurrency market. Vanda Research suggests that retail investors are increasingly drawn to volatile small-cap AI stocks and crypto-related assets. With Nvidia’s valuation already pricing in significant growth, newer speculative assets are attracting attention from traders with a higher risk appetite.
While there’s no definitive evidence of a broad pivot into crypto just yet, the connection between Nvidia and the digital asset world runs deep. A 2024 study revealed a strong 0.80+ correlation between Nvidia and Bitcoin prices, largely due to Nvidia’s role in powering GPU-based crypto mining infrastructure. Many Nvidia investors, therefore, are already familiar with or directly exposed to the crypto space.
Yet, Bitcoin’s recent performance may give some pause. Despite its long-term appeal, Bitcoin has underperformed Nvidia over the past five years posting a 992% return compared to Nvidia’s staggering 1,523.1%. That said, Bitcoin is still seen as a viable long-term hedge and is drawing renewed institutional interest.
Broader Macro Signals Could Tip the Scales
Whether a retail flood into crypto materializes may depend on broader macroeconomic factors. Interest rate decisions, trade policy shifts particularly U.S. tariffs and chip export restrictions to China and regulatory clarity in the crypto space are likely to influence investor appetite. Ongoing concerns about Nvidia’s exposure to geopolitical tensions and China-related chip restrictions are also weighing on sentiment, pushing investors to look for less vulnerable, yet high-potential alternatives.
Final Thoughts
Retail investors are clearly taking profits off the table after a historic Nvidia run. While some of that capital may find its way into AI stocks or crypto markets, the shift will likely depend on how macro conditions evolve and whether digital assets can offer the kind of upside that high-growth equities like Nvidia once delivered.
For now, crypto remains on the watchlist not yet the next big move, but certainly in the running.
