Since the beginning of the last quarter of 2023, artificial intelligence (AI)-related crypto tokens have not only outperformed the top two crypto assets but have also outpaced key AI stocks such as Nvidia and Microsoft. According to a report by Coinbase, much of this market-beating performance of AI-related tokens can be attributed to AI headline news.
Crypto Tokens Focused on AI Outperform BTC and ETH
According to Coinbase’s latest report on cryptocurrency and artificial intelligence (AI), AI-related crypto tokens have outperformed bitcoin and ether since the start of the last quarter of 2023. These tokens have also trounced major AI-related stocks such as Nvidia and Microsoft during the same period.
However, much of this market-beating performance is attributed to “AI headline news” and the strong showing of the crypto industry. According to the report, this performance suggests that the price of AI-focused tokens can trend upwards even when the price of bitcoin is trending downwards. Still, such a downward price movement can inevitably result in “upside volatility during bitcoin drawdown periods.”
To support this assertion, the report used the price movement of the Worldcoin token to demonstrate the connection between the performance of AI-focused tokens and AI headlines. As explained in the report, the release of Worldcoin’s World ID 2.0 upgrade on Dec. 13, 2023, did not spark interest in the WLD coin. However, the promotion of Worldcoin by founder Sam Altman just two days later saw the value of WLD surge by 50%.
Similarly, when Openai, also co-founded by Altman, released Sora, the price of WLD nearly tripled. At the time, Worldcoin’s value of $80 billion was six billion dollars lower than that of Openai, which already generates revenues of about $2 billion per year.
Memetic Speculation
In pushing back against the currently fevered AI hype, the Coinbase report concludes that many “near-term persistent demand drivers” are still lacking in the trade of AI-focused tokens. Furthermore, the lack of clear adoption forecasts and metrics means the trading of AI-related crypto tokens is mostly driven by “memetic speculation.” The report adds:
“Eventually, price and utility will converge – the open question is how long it will take and whether [the] utility will rise to meet price or vice versa. That said, we do think that a continued constructive crypto market and outperforming AI sector could sustain a strong crypto-AI narrative for some time.”
Nevertheless, for investors still keen on trading AI-focused crypto tokens, the report advised them to be prudent and investigate how such tokens can provide a better alternative before committing funds.
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Source: Bitcoin
