- AI-based cryptocurrency is receiving a lot of attention.
- If 2024 replicates 2023’s performance, the total market capitalization could approach $100 billion.
The convergence of artificial intelligence (AI) and blockchain could be a powerful force to watch for this bull cycle. But please don’t take my word for it because I’m just another human with an opinion.
But I’m not the only one intrigued by this combination.
Ethereum (ETH) co-founder Vitalik Buterin appears to share a similar view. But before we go any further, please note that not everything in this article has been condensed into a price prediction.
Instead, you’ll find facts and figures centered around developments within the AI space.
If you’re curious enough to stick around, you might learn a thing or two that explains how AI could impact the cryptocurrency economy in the future. But for now, let’s go back to Buterin.
Ethereum values AI highly.
On February 19, Buterin posted that he was excited about AI applications. However, he focused his attention on code and bug verification on the Ethereum blockchain.
According to Buterin, some of these applications could “change the game in a big way.”
Source: X
Prior to Buterin’s 2024 comments, AI tokens had outperformed many other categories in the market. One perfect example is Fetch.ai (FET).
Interestingly, FET was developed on Ethereum as an open, permissionless, decentralized machine learning network. As of press time, the price of FET is up 109.78% over the past 365 days.
In addition to the hype around AI, there were other factors driving the narrative. One of the undeniable things is the surprising fact that ChatGPT, Open AI’s viral cryptocurrency chatbot, has been adopted in 2023.
The rapid adoption of the tool initially sparked some controversy, with some saying it was just a bubble that would disappear.
However, renowned technology analyst Dan Ives had a contrary opinion. In June 2023, Ives told CNBC that bearish skeptics of the sector may bite their fingers in regret.
He also called AI the fourth industrial revolution and said:
“I think this is a truly groundbreaking technological change that will transform the technology space over the next 20 to 30 years.”
TAO, INJ, etc. may not stop running
If Ives’ comments on AI are anything to go by, we can assume that AI tokens could fall significantly during this bull cycle. AMBCrypto saw Santiment’s on-chain screener and confirmed its potential.
Treemap’s results show prices of AI projects including Bittensor (TAO), The Graph (GRT), and Injective (INJ) soaring.
In the case of TAO, the performance was one not seen in the cryptocurrency market for a long time. At press time, TAO was changing hands at $641.53. This figure represents an increase of 508,010% over the past year.
On the other hand, INJ increased by 72.25% during the same period.
Source: Santiment
So it’s no surprise that social volume surrounding these tokens has skyrocketed. Social volume measures how quickly the market discovers a cryptocurrency.
Increasing numbers indicate increased interest in the project, which can lead to higher prices.
However, a decline in social volume may indicate that the broader market is overlooking your project.
At the same time, it is important to note that if social volume signals a price surge, there will be times when the momentum cools.
So, if you’re thinking “up and down” about all AI tokens, you might be wrong.
Worldcoin has joined the party.
Despite the potential for a reversal, the AI narrative is unlikely to go away anytime soon. But this time it’s not just about ChatGPT.
Recently, OpenAI led by Sam Altman released A new AI tool called Sora. Unlike ChatGPT, Sora is a text to video converter.
Since the announcement on February 15, the prices of the above-mentioned tokens have skyrocketed.
In addition to those listed, AMBCrypto also reported that Worldcoin (WLD), co-founded by Altman, has reached a new all-time high (ATH).
If Sora experiences adoption like ChatGPT, WLD could cross new ATHs along with other AI tokens. However, if Sora fails to reach these levels, the peaks of these cryptocurrencies may not be very high.
AMBCrypto spoke with Eric Bravick about the potential of AI in the cryptocurrency space. Bravick is the Head of Artificial Intelligence at CryptoOracle Collective.
According to him, due to the high level of utility of AI, the token could become one of the best-performing assets in this cycle. He told us:
“AI will continue to remain relevant in the cryptocurrency space due to its high utility and potential for hype cycle sustainability, and cryptocurrencies will require a new cycle, driving AI adoption.”
But my conversation with Cuautemoc Weber was somewhat different. Weber is the CEO and co-founder of Gateway.fm, a decentralized blockchain infrastructure node provider.
According to him, predicting long-term potential may be difficult, but
“The level of interest in AI-related tokens has risen significantly recently, with Worldcoin’s WLD token and Ocean Protocol’s OCEAN token demonstrating strong market performance. “It is difficult to predict whether this momentum will continue in the long term, but the integration of AI within the cryptocurrency ecosystem holds tremendous promise.”
GPU prepares new ATH for AI tokens.
Another factor fueling the rise of AI-themed cryptocurrencies is the demand for graphics processing units (GPUs). GPUs are an essential part of modern artificial intelligence infrastructure.
Recently, it has been developed and optimized specifically for deep learning.
We also had the opportunity to speak with Christopher Alexander. Alexander is Chief Analytics Officer at Pioneer Development Group.
In our brief chat with him, we asked him how long he thinks AI will remain relevant in the cryptocurrency ecosystem. Here’s what he had to say:
“Blockchain’s decentralized computing power means AI cryptography efforts could soon rival the world’s most powerful supercomputers at a fraction of the operating costs. We believe blockchain has enormous potential to develop and operate some of the most effective AI tools and servers ever created.”
Interestingly, tokens such as Render (RNDR) are used here. RNDR is the ERC-20 utility token of the Render Network. For those unfamiliar, Render is a distributed GPU rendering network built on Ethereum.
Over the past 365 days, the price of RNDR increased by 236.54%. When AMBCrypto checked the total number of RNDR holders, we observed that the number was increasing.
For example, as of August 2023, the number of holders was just under 40,000. But at press time, that number had risen to 65,600. The situation was similar for FET, where the number of holders increased to 61,100.
Source: Santiment
Pay attention to the mid- to low-price upper limit as demand increases
The growing number of holders was evidence that the broader market is aligned with the prospect that AI tokens could run rampant once the bull market gets off to a good start.
At press time, the total market capitalization of the AI category in the market was $10.28 billion.
However, macroeconomic factors such as the AI semiconductor market may push the value higher. For example, a recent article in NIKKEI Asia noted that global demand for semiconductors will surge by the second quarter of 2024.
Additionally, business intelligence platform Statista noted:
“The AI semiconductor market is expected to surge to $119.4 billion in 2027, accounting for nearly 20% of the global semiconductor market.”
If so, the market capitalization of AI-themed cryptocurrency is likely to rise. However, it is still unclear whether the market cap will exceed $100 billion this cycle.
To achieve this, the average value of tokens in that category would need to increase by 10x.
It’s not impossible, but the goal seems too lofty. Nonetheless, there seem to be low-to-mid-priced cryptocurrencies that can reach 5x or 10x. This projection was due to the surrounding narrative.
Two main examples are PAAL AI (PAAL) and Sleepless AI (AI).
PAAL is an AI token built on Ethereum. At press time, PAAL’s market capitalization was $285.11 million. If the price of ETH rises amid the AI hype, PAAL could see a surprising rise.
Sleepless AI, on the other hand, is based on game narrative. It was launched on Binance Launchpad and had a market cap of $226.4 million at the time of writing.
Realistic or not, here is the market capitalization of FET expressed in INJ terms:
Additionally, discussions with Bravik led to his thoughts on long-term feasibility. When asked whether the combination of AI and cryptocurrency will continue for some time, Bravik said:
“With privacy advocates and potential use cases related to AI-based systems, we expect to see a surge in AI-related token launches over the next decade. AI will also transform UX into cryptocurrency, abstracting engineering time and making development more accessible.”