The Crypto markets have been known to be fueled by narratives, and the latest trend is Artificial Intelligence (AI). Prominent traders on Crypto Twitter are heralding AI-based tokens as the sector that might lead the next bull market cycle, and the data shows that they may be right. Tokens for platforms such as Alethea’s Artificial Liquid Intelligence (ALI), Fetch.ai (FET) and SingularityNET (AGIX) have surged as much as 220% in the past week. Other tokens such as Image Generation AI (IMGNAI) have more than tripled over a two-week period.
The tokens of Big Data Protocol (BDP) and Measurable Data (MDT) have also jumped on the hype, with BDP surging 2,100% in the past week and MDT jumping 150%. Both protocols use their tokens to commoditize data, allowing providers and buyers to exchange data securely and anonymously.
So 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. The recent surge in AI tokens emerged after the public launch of chatbot ChatGPT and image generation software Dall-E in mid-2022. Institutional interest from companies such as Microsoft has helped create a compelling argument for crypto traders to bet on AI-focused tokens as the next growth sector.
However, some market watchers remain cautious about the AI token hype. Financial market consultant Valentina Drofa told CoinDesk, “There is a risk that this whole ‘new trend’ is going to end up in an empty hype, as there are many speculators that would seek to make use of short-term price pumps. The industry at large will end up dealing with the long-term fallout and another hit to its image. Such cycles are becoming rather tiresome and sad to observe again and again.”
It remains to be seen whether the AI token surge is a sign of a new bull market cycle or just another empty hype. In the meantime, investors should be aware of the risks and do their own research before investing in any token.