This should be artificial intelligence-powered crypto projects’ moment.
On paper, they have everything going for them.
OpenAI just launched its latest version of ChatGPT and has announced plans for new data centres, chipmaker Nvidia has become the most valuable company in the world, and AI startup Anthropic’s valuation has skyrocketed to $183 billion.
At the same time, projects innovating at the intersection of crypto and AI raised over $516 million in the first eight months of the year, a 6% uptick from the amount raised in total in 2024, according to data from DefiLlama.
But within the $4 trillion crypto market, AI-powered projects are still just a tiny subsector valued at a combined $30 billion.
“Companies that mix crypto and AI are in an awkward position at the moment”
— Maxim Legg, CEO of Pangea
Despite the bullish signals, the overall market value of AI-powered projects has pulled back over 50% since its December $70 billion high and is trading sideways, CoinMarketCap data shows.
“Companies that mix crypto and AI are in an awkward position at the moment,” Maxim Legg, CEO of dataset firm Pangea, told DL News. “That’s why they’re moving sideways in terms of price.”
The way he put it, the crypto AI market can be divided into two camps. On the one hand you have the serious innovators, on the other you have speculative projects that simply use “AI as a branding tool to get traction and generate hype,” Legg said.
The latter category won’t react to the bullish market signals like Nvidia’s quarterly results or OpenAI’s latest releases, he said. They “aren’t relevant to them,” Legg said.
Crypto-AI innovators, on the other hand, aren’t high level enough to provide products that grab headlines and attention from investors, Legg said.
“This state of affairs will likely keep going until crypto AI projects begin providing higher-level service,” Legg said.
The next bull run
To be sure, the sideways trading in the crypto-AI field isn’t the only concerning signal.
So far, 95% of AI pilot programmes in general have failed to make a profit, according to a Massachusetts Institute of Technology report.
Even Sam Altman, the CEO of OpenAI and the face of the AI revolution, signalled in August that an AI bubble might be forming, and said that “some investors are likely to lose a lot of money.”
Despite those bearish signals, industry stakeholders suggest that the AI-crypto market segment is just going through a quiet consolidation phase before the next move skyward.
AI-powered cryptos may appear “subdued now, but the groundwork being laid could prove decisive in the next bull phase” similar to DeFi after the first hype cycle, Leo Zhao, investment director at the venture capital arm of crypto exchange MEXC, told DL News.
Practical use cases are already emerging, industry voices told DL News.
“Crypto AI is creating entirely new kinds of digital assets,” Sean Ren, a computer science professor at the University of Southern California and CEO of AI blockchain platform Sahara Labs, told DL News.
Proponents of the confluence of AI and crypto aren’t short of examples of how markets will benefit.
Those examples include AI agents — autonomous programmes that could supposedly replace humans in market analysis, trading, and social media marketing — fraud detection, smart contract auditing, and decentralised “compute” marketplaces, where raw computational power can be pooled and rented out to users and developers through blockchain-based networks.
AI is quietly powering crypto infrastructure, from automated trading and risk management to mining optimisation and blockchain security, Tom Bruni, editor and VP at markets-oriented social media platform Stocktwits, told DL News.
Initiatives like those were the reason why Bitwise researchers last year estimated that the marriage of AI and crypto could add another $20 trillion to the global economy by 2030.
But to do that, AI-crypto projects must prove that they have something to offer that the likes of OpenAI can’t. So far, those results have been lacking.
“A lot of the buzz from last year’s AI-crypto trend came from promises surrounding AI agents and memecoins that, for the most part, didn’t live up to the hype,” Kony Kwong, CEO and co-founder of AI infrastructure company GAIB, told DL News.
