AI narrative accelerates, sentiment switches to bullish on several assets

Crypto liquidity is constantly switching between narratives. AI tokens are in focus again, with several assets switching to bullish sentiment.

AI tokens keep getting attention, mostly based on the recent announcement of a new Grayscale mixed fund. But the effect extends beyond the selection of Grayscale tokens. Alpha indicators also point to Worldcoin (WLD) reawakening, in spite of the upcoming token unlock in a week. 

The AI narrative has achieved an overall 31% growth, based on a basket of relatively older tokens. There is no consensus which tokens make up the AI space, but the trend is seen for FET, AGIX, RNDR, TAO, OCEAN, ORAI and CTXC. Almost all tokens in the AI narrative have very differing individual trajectories, and they do not rise as a whole due to different listings and available liquidity.

The overall rally still hinges on the overperformance of Near Protocol (NEAR), with the biggest market cap among AI tokens. NEAR retained its recent gains and stood at $6.07, adding to the sector’s stability. 

Also Read: AI tokens surge amid Grayscale’s fund announcement

Injective (INJ) and Bittensor (TAO) were also among the biggest weekly gainers, expanding by more than 33%. The effect of the Grayscale fund, however, is limited. Livepeer (LPT) is a relatively older token that is not included in the AI narrative explicitly. However, Grayscale includes LPT in its AI portfolio, as the asset is older and widely distributed. Grayscale may have also received a large LPT airdrop in the past, based on ETH holdings.

Not all crypto projects use the AI narrative in the same way. The inclusion of AI ranges from big data to using versions of ChatGPT. Others focus on big data and analysis. Some of the current projects considered AI tokens are older ICOs that have added a new feature. Despite this, the AI narrative has helped create rallies during the 2024 bull market.

The entire AI ecosystem is much wider compared to the tokens selected for direct investment. The narrative has also grown into meme tokens based on AI-generated images and ideas. Use cases include user-oriented apps and chatbots. The most concrete product offered is GPU access, with more than a dozen active projects.

Other Web 3 projects add AI features to their existing products, mixing them with gaming or DeFi. There is a disconnect between large-scale tokens like FET and the large collection of niche startups. The recent growth of AI tokens still affects the most prominent ones, and the narrative is not enough to lift all similar assets.

AI projects aim to move beyond hype

The big problem with narrative trading is that some of the projects may look like vaporware. Currently, AI crypto startups have different metrics in offering a real product. 

Render Network (RNDR) offers the most concrete service, a collection of GPUs specifically for graphics rendering. Other decentralized GPU networks include Golem, Akash, and IO.net.

The chain boasts a worldwide map with 600 live operators, based on recent tracking. The chain also renders more than 78K scenes, based on Dune Analytics reporting. While Render offers a real-life service, it is also affected by market fluctuations. 

The goal of some nodes and network participants is to mine for more RNDR. The RNDR tokens can be used to buy additional rendering power, but some may be sold on the market. 

Also Read: DeFi Technologies’ Valour introduces an exchange-traded product (ETP) for NEAR

The AI sector also overlaps with the DePin, or decentralized infrastructure narrative. Some of the main AI tokens are also DePin tokens . RNDR is also a top project among infrastructure providers. 

At the same time, the recently booming Near Protocol resorted to social media tactics to draw more attention to its products. Near Protocol has attempted to join earlier narratives, including decentralized finance and Web3.

The recent move by Grayscale also reveals that hype still partially rules AI-related tokens. The new fund will only target accredited investors, meaning it will not lead to significant inflows. However, the fund launch worked to bring attention back to AI tokens, which were among the slower narratives in the summer of 2024. 

Grayscale has based its selection on several use cases of AI and related technologies. The projects also focus on related issues such as identities, verification, bot detection, as well as decentralized computation services.

Cryptopolitan reporting by Hristina Vasileva