AI-powered crypto projects down over 50% in value overall since 2024 and trading sideways.Startups outpacing 2024\u2019s funding efforts.<\/p>\n
This should be artificial intelligence-powered crypto projects\u2019 moment.<\/p>\n
On paper, they have everything going for them. <\/p>\n
OpenAI just launched its latest version of ChatGPT and has announced plans for new data centres<\/a>, chipmaker Nvidia has become the most valuable company in the world<\/a>, and AI startup Anthropic\u2019s valuation has skyrocketed to $183 billion<\/a>. <\/p>\n At the same time, projects innovating at the intersection of crypto and AI raised over $516 million<\/a> in the first eight months of the year, a 6% uptick from the amount raised in total in 2024, according to data from DefiLlama<\/a>.<\/p>\n But within the $4 trillion crypto market, AI-powered projects are still just a tiny subsector valued at a combined $30 billion. <\/p>\n \u201cCompanies that mix crypto and AI are in an awkward position at the moment\u201d <\/p>\n \u2014 \u00a0Maxim Legg, CEO of Pangea<\/p>\n 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<\/a>.<\/p>\n \u201cCompanies that mix crypto and AI are in an awkward position at the moment,\u201d Maxim Legg, CEO of dataset firm Pangea, told DL News. \u201cThat\u2019s why they\u2019re moving sideways in terms of price.\u201d<\/p>\n 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 \u201cAI as a branding tool to get traction and generate hype,\u201d Legg said. <\/p>\n The latter category won\u2019t react to the bullish market signals like Nvidia\u2019s quarterly results or OpenAI\u2019s latest releases, he said. They \u201caren\u2019t relevant to them,\u201d Legg said. <\/p>\n Crypto-AI innovators, on the other hand, aren\u2019t high level enough to provide products that grab headlines and attention from investors, Legg said. <\/p>\n \u201cThis state of affairs will likely keep going until crypto AI projects begin providing higher-level service,\u201d Legg said. <\/p>\n The next bull run<\/p>\n To be sure, the sideways trading in the crypto-AI field isn\u2019t the only concerning signal.<\/p>\n So far, 95% of AI pilot programmes in general have failed to make a profit, according to a Massachusetts Institute of Technology report<\/a>. <\/p>\n 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<\/a> that \u201csome investors are likely to lose a lot of money.\u201d<\/p>\n 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.<\/p>\n AI-powered cryptos may appear \u201csubdued now, but the groundwork being laid could prove decisive in the next bull phase\u201d similar to DeFi after the first hype cycle, Leo Zhao, investment director at the venture capital arm of crypto exchange MEXC, told DL News. <\/p>\n Practical use cases are already emerging, industry voices told DL News. <\/p>\n \u201cCrypto AI is creating entirely new kinds of digital assets,\u201d Sean Ren, a computer science professor at the University of Southern California and CEO of AI blockchain platform Sahara Labs, told DL News.<\/p>\n Proponents of the confluence of AI and crypto aren\u2019t short of examples of how markets will benefit. <\/p>\n Those examples include AI agents<\/a> \u2014 autonomous programmes that could supposedly replace humans in market analysis, trading, and social media marketing \u2014 fraud detection, smart contract auditing, and decentralised \u201ccompute\u201d marketplaces, where raw computational power can be pooled and rented out to users and developers through blockchain-based networks.<\/p>\n 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.<\/p>\n Initiatives like those were the reason why Bitwise researchers last year estimated that the marriage of AI and crypto could add another $20 trillion<\/a> to the global economy by 2030.<\/p>\n But to do that, AI-crypto projects must prove that they have something to offer that the likes of OpenAI can\u2019t. So far, those results have been lacking. <\/p>\n \u201cA lot of the buzz from last year\u2019s AI-crypto trend came from promises surrounding AI agents and memecoins that, for the most part, didn\u2019t live up to the hype,\u201d Kony Kwong, CEO and co-founder of AI infrastructure company GAIB, told DL News.<\/p>\n