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News/AI Heats Up Crypto Market as Investors Eye the Future

AI Heats Up Crypto Market as Investors Eye the Future

Van Thanh Le

Mar 7 2024

4 months ago3 minutes read
A close-up of an AI robot interacting with a crypto display

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Crypto Market Sees AI Tokens Surge, Meme Coins Fall

The cryptocurrency market is experiencing a shift as AI-linked tokens like Fetch.AIRender Network, Sleepless AI, and SingularityNET jump up to 40% on March 7. This burgeoning interest is fueled by rumors of an impending AI-centric crypto product reveal at an eagerly anticipated Nvidia conference. This growth was also supported by broader AI industry developments, such as Anthropic AI's Claude v3 release and OpenAI's Sora debut.

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The AI crypto sector's combined market cap has escalated significantly to $25.1 billion in less than a month, marking a monumental rise of approximately 150% from $9.64 billion on February 16th, showcasing the global enthrallment with AI technology advancements. In this swift ascension, the AI crypto market witnessed gains of 5.42% over the past 24 hours and an impressive 23.88% over seven days.

Leading the charge are six predominant AI-related tokens by market cap: Internet Computer (ICP), Bittensor (TAO), The Graph (GRT), Fetch (FET), SingularityNet (AGIX), and WorldCoin (WLD), each contributing uniquely to the sector's vibrancy and diversity.

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Despite the inherent technological disconnect, whereby AI cannot directly function on blockchain, these AI tokens have captured the market's imagination. The speculation is grounded in the belief that AI will spearhead groundbreaking changes across the global economy, a sentiment echoed by the recent successes of AI giants such as OpenAI.

Contrasting sharply with this rise is the downturn of meme coins, including DogecoinPEPE, and dogwifhat, which have tumbled over 10% in the last day alone. This slump marks a cooling off from a period of intense activity, sparked by Bitcoin's fleeting jump to record highs, which had retail traders buzzing with excitement. 

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The changing tide is also reflected in the waning interest in DOGE-tracked futures open interest, which have plummeted by $400 million from their peak since Tuesday. This movement indicates a strategic redirection of investment within the crypto sphere, from meme coins to AI-linked projects. Interestingly, after a quick correction, some meme coins started to recover on March 8, leading to new highs on exchanges.

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Source: Coinglass

This pivot towards AI tokens is largely attributed to trader speculation ahead of Nvidia's much-anticipated conference, set for March 17-21. The active involvement of crypto AI project developers in the event, particularly through panel discussions, is seen as a key driver behind this shift.

Central to this narrative is Nvidia's impressive performance, with its fourth-quarter earnings and outlook for the first quarter exceeding forecasts, adding further momentum to the AI token rally last month. This scenario presents a vivid illustration of the dynamic interplay between technological innovation and market speculation, reshaping the crypto trading landscape.

Surge in Profits for AI Coin Holders: Santiment Data Reveals

AI-powered cryptocurrencies are experiencing a surge in popularity, with some investors seeing significant gains. A recent analysis by Santiment revealed a wallet holding AI-focused coins that skyrocketed 30.7% in just 24 hours.

Michael Saylor, a luminary in the cryptocurrency domain, recently vocalized the symbiotic promise between AI and Bitcoin, proposing that Bitcoin's appeal could swell alongside advancements in AI. Saylor's insights illuminate the far-reaching consequences of melding AI with blockchain and cryptocurrency technologies, envisioning a future where digital currencies are integral to the AI landscape.

He didn't stop there; Saylor also delved into the environmental footprint of Bitcoin, paralleling it with the anticipated escalation in energy use by AI projects — a leap from 60 gigawatts to a staggering 600 gigawatts over the next decade. This analogy highlights the burgeoning energy requirements of frontier technologies and the ensuing sustainability quandaries.

Highlighting market dynamism, Santiment pointed out AI projects like Delysium (AGI), SingularityNET (AGIX), and Artificial Liquid Intelligence (ALI), which have shown remarkable market vigor, marked by "massive green candles" on their weekly charts. This underscores a robust market enthusiasm and bullish outlook towards AI-centric digital currencies.

Investor patterns have also evolved, with Santiment noting a pivot from traditional investment havens, such as Bitcoin lows and memecoins, towards niche, technology-driven projects. This shift signifies a strategic diversification among crypto investors, with an eye on the burgeoning potential of AI.

AI robot amidst crowd trading cryptocurrencies in a neon cityscape.webp

In other AI-related updates, Worldcoin, an initiative by Tools for Humanity, finds itself navigating regulatory hurdles in Spain and Hong Kong. The Spanish Data Protection Agency (AEPD) has imposed a three-month hiatus on its data collection efforts amidst privacy concerns. With its ambition to forge a universally accessible financial network, using biometric scanning devices, Worldcoin has stirred a pot of controversy, reflecting the complex interplay between innovation, privacy, and regulatory oversight.

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However, a Coinbase research proposes a cautious outlook, arguing AI tokens may currently be more hype than substantiated value, primarily due to the clash between crypto's decentralization ethos and AI's centralized nature.

The report highlights underwhelming investor interest in crypto AI projects and emphasizes the necessity of meaningful adoption beyond the mere decentralization of AI components for long-term ecosystem sustainability.

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The first part of the report.

Despite some AI tokens outperforming major assets like Bitcoin, Nvidia, and Microsoft, the report attributes this to broader market sentiment and AI sector performance, questioning the durability of these gains. Addressing the ecosystem's challenges and potential, Coinbase underscores the opportunities for blockchain data improvement and AI infrastructure decentralization while noting the uncertain future of both the AI industry and decentralized AI visions.

Conclusion

Fueled by speculation around an upcoming Nvidia conference and the potential of AI, AI-linked crypto tokens are surging, while meme coins slump. This shift reflects investor interest in emerging technologies and the ever-evolving nature of the cryptocurrency market.

FAQs

1. Why are AI-linked crypto tokens rising?

AI-linked crypto tokens are rising due to speculation surrounding an upcoming Nvidia conference and the belief that AI will revolutionize various sectors, similar to recent successes of AI giants like OpenAI.

2. Why are meme coins falling?

Meme coins are falling after a period of intense activity sparked by Bitcoin's price surge. This decline signifies a cooling off and a potential shift in investor focus towards AI-related projects.

3. What are the environmental concerns surrounding AI and cryptocurrencies?

Concerns exist about the increasing energy consumption of both AI projects and Bitcoin mining. Michael Saylor, a prominent figure in the crypto space, recently compared the potential rise in AI energy use to the current footprint of Bitcoin.

4. What is the controversy surrounding Worldcoin?

Worldcoin, an initiative aiming to create a universally accessible financial network, is facing regulatory hurdles in Spain and Hong Kong due to privacy concerns raised about its use of biometric data collection.

This article has been refined and enhanced by ChatGPT. 

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