Crypto markets are known to be fueled by narratives, and artificial intelligence (AI) is the latest trend.
Prominent Crypto Twitter Traders Herald AI-Based Tokens as the Sector That Could Lead the following bull market cycle. They may be right so far: these tokens have risen an average of 80% in the past week alone, according to data from CryptoSlate.
Among the biggest gainers are tokens such as Artificial Liquid Intelligence (ALI), Fetch AI (FET), and Singularity Net (AGIX), which jumped 220%, as CoinDesk previously reported.
Tokens from AI-based startups like Image Generation AI (IMGNAI) more than tripled over a two-week period. The protocol allows users to generate artwork using text disruptions on social platforms such as Discord.
Unique popular tokens of 2018 and 2021 such as Big Data Protocol (BDP) and Measurable Data (MDT) seem jumped on the hype with tweets that seem to remind investors on how they use AI technology in their blockchain applications.
BDP jumped 2,100% last week, according to data from CoinGecko, while MDT jumped 150%. Both protocols use their tokens to commoditize data, allowing suppliers and buyers to exchange data securely and anonymously.
Crypto majors such as bitcoin and ether have paled in comparison, rising just 30% each in the past month despite fundamental catalysts. However, the market capitalization of the major tokens is over $300 billion, which means that they require large investments and public interest for prices to increase by several times in a few weeks.
AI broadly refers to the simulation of human intelligence in machines programmed to think and act like humans. Popular applications of this technology have so far been limited to chatbots, self-driving cars, online marketplace search optimization and image generation software – but futuristic use cases envision fully self-contained cities, cyborg humanity, and interstellar travel.
Much of the recent surge in AI tokens came after the public launch of ChatGPT chatbot and Dall E image generation software in mid-2022. Both are legacy software that don’t use cryptocurrencies or blockchains and were pioneered by OpenAI, which recently raised $10 billion from Microsoft at a $29 billion valuation.
Such institutional interest has helped create a compelling case for crypto traders to bet on AI-driven tokens as the next growth area.
“The growth opportunity around the AI and Web3 space combines early interest, potential and hype,” says Ravindra Kumar, founder of crypto services firm Frontier. see the emergence of innovative and convincing use cases.
Aditya Khanduri, Head of Marketing at Biconomy, takes a softer approach: “I think the current AI trend is still quite speculative, leading to a jump for tokens like OCEAN, ALI, AGIX. Some of the tokens with more buzz and follow-ups have pumped in and it’s less about the actual technology behind it.
“That’s because current AI tokens and Web3 projects may not yet know what these decentralized AI tools look like. There are a lot of unanswered challenges and a lot to solve,” Khanduri said. to CoinDesk in a recent conversation.
The likes of Kandhuri say token-based usage while scaling AI software is a tough problem to solve.
“Suppose an AI tool reaches 250 million users. So what will its infrastructure look like? How will people use it? How will the data be formed? Where does the token fit in? Can you even have a way to reward people for their data if you used it to train your models? ” he said.
Meanwhile, some market watchers remain cautious about the AI token hype.
“Once the market starts to heat up a bit, all kinds of new trends come out of the woodwork. And not all of them are as strong as they might seem,” financial market consultant Valentina Drofa told CoinDesk.
“There is a risk that this whole ‘new trend’ will end in empty hype, as many speculators would look to use short-term price pumps,” Drofa added, referring to recent multiple gains. set up by a few tokens.
“The industry as a whole will eventually face long-term fallout and another blow to its image. Cycles like this become rather boring and sad to watch over and over again,” she said.
