AI is taking over the crypto market 🤖

GM Guys and Gals,

Crypto markets are known to be fueled by narratives, and artificial intelligence (AI) is the latest trend.

Prominent traders on Crypto Twitter are heralding AI-based tokens as the sector that might lead the next bull market cycle. They may be right so far: Such tokens are up an average of 80% in the past week alone.

Among the biggest gainers have been tokens for platforms such as Alethea's artificial liquid Intelligence (ALI), fetch.ai (FET) and SingularityNET (AGIX), which have surged as much as 220%.

The tokens of AI-based upstarts like Image Generation AI (IMGNAI) have more than tripled over a two-week period. The protocol allows users to generate artwork using text disruptions on social platforms such as Discord.

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 major tokens is upward of $300 billion, meaning they require significant amounts of investment and public interest for prices to surge multifold within a few weeks.

Why are AI tokens surging?

AI broadly refers to the simulation of human intelligence in machines programmed to think and act like humans. Popular applications for this technology have so far been limited to chatbots, self-driving cars, optimizing search in online marketplaces and image-generation software – but futuristic use cases envision wholly autonomous cities, cyborg humankind and interstellar travel.

Much of the recent surge in AI tokens emerged after the public launch of chatbot ChatGPT and image generation software Dall-E in mid-2022. Both are traditional software that does not use cryptocurrencies or blockchain and were launched by OpenAI, which recently raised $10 billion from Microsoft at a $29 billion valuation.

Such institutional interest has helped create a compelling argument for crypto traders to bet on AI-focused tokens as the next growth sector.

Aditya Khanduri, head of marketing at Biconomy, takes a milder approach: “I believe that the current AI trend is still pretty speculative, leading to a jump for tokens like OCEAN, ALI, AGIX. Some of the tokens with more buzz and followings have pumped and it's less about the actual tech behind it.”

“Say an AI tool gets to 250 million users. Then what will its infra look like? How will people use it? How will the data be trained? 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.

As the crypto world continues to evolve, we will keep you updated on all the latest developments. Stay tuned for more updates from Web3shala.

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That’s it for the day, Web3Shala 👋

To the Moon 🚀