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What happened to crypto AI tokens?

TL;DR

  • Kaiko, under analyst Dessislava Ianeva, reports that AI tokens such as FET, GRT, RNDR, OCEAN, and ROSE fell from $170M earlier in 2023 to just $60M in August.
  • The reason for the decline among AI tokens is due to a shift in global risk appetite, as seen with Sam Altman’s Worldcoin.
  • Weekly trade volumes for AI tokens jumped to $870 million in August after plunging to yearly lows of $570 million in late July.

Crypto AI tokens are digital assets that use blockchain and artificial intelligence technology. The tokens generated hype in 2022 after the launch of Image generators and the AI Chatbox, ChatGPT, which attracted a debate. 

The integration of both technologies seemed promising; however, according to Kaiko, despite the billions channeled to AI startups, the interest in AI tokens in the market has remained stagnant. As the interest around the tokens reduces, the numbers perceive a mixed story.

AI tokens plummet 

The JP Morgan research, The E-trading edit, highlighted that the market trajectory is shifting towards AI rather than blockchain, which sparked debate in the crypto community. However, the market is yet to respond to the hype as the trade values plummet. AI Tokens have been facing a downward trajectory since the beginning of the year. 

Kaiko referred to five AI top tokens (ROSE, OCEAN, RNDR, FET, and GRT), which have plummeted by $110 million in 2023.

Like other cryptocurrencies, the tokens were bullish in the first two months, especially in February, when they experienced a significant surge due to the market hype. For instance, BDP rose by 4000% while GNY rose by 946.6%, and AGIX increased by 669.2% in a 30-day timeframe. However, there has been a gradual decrease in interest, causing the downswing. 

The controversial Worldcoin launch led to an ephemeral spike; the Sam Altman Project soared by 85% on the launch day. However, the token price has since plummeted by more than 50%. The enthusiasm was short-lived as the project met skepticism, especially due to biometric data security concerns. 

States such as France and the UK have already questioned the data collection process. The regulatory scrutiny has also hindered the ChatGPT effect on the crypto AI Tokens market.  

Here are the reasons behind the decline 

Dessislava Ianeva, a Kaiko analyst, attributes the decline in AI tokens to the global shift in risk appetite, leading to most speculators leaving as the hype fizzles out. She added that the alleged economic slowdown in China has raised concerns in the market, leading to a decline in token trading activity. 

She said that China’s actions have significantly impacted the investor’s appetite more so since the crypto industry cannot explain the same. Ianeva added that even if NVIDIA recorded high revenue, it did not generate interest in the industry, indicating that the hype has died down among sectors.

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Source: Kaiko

Blockchain and artificial experts have also questioned whether the two technologies are compatible, as speculation rather than the projects typically drive the market value; this has raised even more skepticism, leading to the plummet.

Speculators have also claimed that AI tokens are only as good as the information fed to them, which would lead to a biased market and inconsistent outcomes. They also argue that AI cannot be used as a decision-making tool since it is unlikely to make better risk management decisions than a human-driven market. 

Not forgetting the gains 

Some projects still recorded notable increases in their market value despite the market hype decline. Kaiko stated that projects such as Ocean Protocol and Fetch.ai(FET) are still gaining traction; for instance, FET recorded a 90% surge in August. The AI tokens’ indecisiveness is further revealed as AI tokens trade volumes significantly grew in August despite the interest plunge. 

Kaiko reported that after recording lows of up to $570 million in July, the volumes surged to $870 million in August.

The analyst added that the bullish trajectory can be attributed to the increased need for capital in the market, creating competition. She added that only cutting-edge projects will attract capital in the challenging macroeconomic state. Regardless, Ianeva asserts that she is hopeful and confident about the near future. She notably stated that October is the best for crypto since forward-looking traders will start positioning themselves for the Bitcoin halving.

AI Tokens have been a dominant topic this year as AI seems not to have made up its mind in the market. Some tokens have recorded significant losses due to the reduced interest, while others have increased in the recent month. However, the market has some optimism as traders position themselves for the halving. 

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Florence Muchai

Florence is a crypto enthusiast and writer who loves to travel. As a digital nomad, she explores the transformative power of blockchain technology. Her writing reflects the limitless possibilities for humanity to connect and grow.

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