While some AI tokens continue to offer profitable trading, the long-term sustainability of the ecosystem will require more than just the decentralization of AI components.
Popular platform Coinbase Institutional has taken a bearish stance toward artificial intelligence (AI) tokens in the cryptocurrency industry, stating that “the potential value of many AI tokens could be overstated.”
According to a market intelligence report titled Crypto’s AI Mirage and written on Wednesday by Coinbase Institutional research analyst David Han, he noted that “many AI tokens could lack sustainable demand-side drivers in the short term.” and medium term.
Likewise, David Han noted in the document that he believes that some of the emerging trends in the artificial intelligence sector could actually hinder the adoption of cryptocurrency-based innovations. This, in light of broader competition from the crypto market and global regulators.
The report highlights two opportunities for the AI cryptocurrency ecosystem: improving blockchain data to create human-readable transactions and analysis and helping to decentralize predominantly centralized AI infrastructure. However, Han said that “A decentralized AI future, as currently envisioned by many in the crypto industry, is not guaranteed; in fact, the future of the AI industry itself is still largely undetermined.”
However, the Coinbase Institutional expert’s recent opinions contradict the current sentiment around AI tokens. For reference, according to data from CoinGecko, AI-related tokens have risen more than 37% in aggregate, in the last seven days. This increase is significantly more than most other sectors of the cryptocurrency market, excluding memecoins.
Despite Coinbase Institutional’s pessimistic outlook on AI tokens, David Han acknowledged that developments in the cutting-edge artificial intelligence sector “tend to support positive price movements” for certain crypto market tokens.
Therefore, Han noted that Coinbase Institutional believes that many tokens related to artificial intelligence could continue to be marketed as a “more general indicator of AI progress,” a trend that has been observed in recent months.
AI Tokens Soar Ahead of Nvidia Conference
As a reference for sector growth, AI-related tokens took the lead this Thursday, with “Fetch.ai” (FET) increasing 69.53% in the last week, followed by SingularityNET (AGIX), which also it rose 38% weekly. According to CoinGecko, the market capitalization of AI tokens stands at $26.08 billion.
According to Miles Deutscher, a popular crypto analyst of AI-related tokens, these assets are surging ahead of Nvidia’s global conference on AI for developers and engineers on March 18. Given this, Miles Deutscher published in X that the race in the sector is predicted to “continue.”
Currently, the Render token (RNDR), linked to a Blockchain that contributes computational power to 3D rendering projects and provides the possibility of earning tokens in exchange, has also recovered, increasing by 33.12% in the last 7 days.
On the other hand, AI tokens saw a surge at the end of January, shortly after Nvidia beat analyst estimates for the company’s fourth-quarter earnings.
Strahinja Savic, head of data and analytics at FRNT Financial, pointed out in an interview the importance of questioning how effective exposure to artificial intelligence is through these AI tokens. Furthermore, Savic noted that most of these tokens do not have a direct connection to the adoption driven by Google’s ChatGPT, or Gemini.
The AI token ecosystem is currently in its initial phase and will need to “understand the underlying business narrative at a minimum” to eventually provide a comparable alternative to cryptoassets, according to Coinbase Institutional.
By Leonardo Perez
