2023 was declared by many to be the year of Artificial Intelligence (AI) so it didn’t come as a surprise when AI Tokens, cryptocurrencies related to the emerging technology, began to skyrocket at the beginning of the year.
AI Tokens are cryptos that use artificial intelligence to improve the user experience, scalability, and security of blockchain networks. Some of them are Singularity ($AGIX), Artificial Liquid Intelligence ($ALI), Phala Network ($PHA) and recently Worldcoin ($WLD).
The sudden increase in AI usage at the time caused a corresponding increase in the interest in AI tokens, with a handful of AI tokens recording crazy price increases earlier in the year. Usually, AI tokens support AI projects like decentralised marketplaces, market predictions, and portfolio management. AI-powered tokens can also give governance rights to their holders and for transactions.
Read also: One month after its launch, here’s why PayPal USD has failed to gain popularity
Because AI use cases are nearly limitless, industry experts pointed to AI as the source of the next bull market. However, market trends have revealed that the AI-based digital assets have fallen flat and the hype surrounding everything AI is not sustainable for crypto assets based on the technology.
AI tokens decline
According to recent trading data from Kaiko, the weekly trade volume for AI-affiliated tokens “remained subdued” in August. The data analysed the trading volume of five leading AI tokens. The list includes SingularityNET (AGIX), Fetch.ai (FET), The Graph (GRT), Render (RNDR), and Worldcoin (WLD). It also includes AKT, OCEAN, and ROSE combined.
Per the Kaiko data, the trading volume of AI-related tokens increased steadily during the past month, with an increase in the trading volume of AI tokens from $570 million to $870 million from the end of July to the end of August.
However, taking a broader look at the figures, it has decreased significantly since the beginning of 2023, when it exceeded $7 billion, and has stagnated since then.
Per Dessislava Ianeva, an analyst from Kaiko, enthusiasm for AI tokens began to diminish in July, primarily due to a change in global risk sentiment. The total open interest for five of the biggest AI tokens, excluding WLD, dropped from $170 million in February to $60 million by August.
What this shows is that while the debut of Worldcoin shed a fresh spotlight on AI tokens, it was not enough to take it out of stagnation.
What is the cause of this decline?
It might be too early to outrightly state but AI Tokens might have followed the usual crypto pattern of “what goes up must surely come down.” Remember a handful of hype and excitement behind earlier narratives like DeFi, NFTs, Metaverse etc and take a look at their current states.
What this shows is that sentiment easily wanes in the Web3 space and to truly stand the test of time, projects need to build utility-driven applications that solve day-to-day problems for users.
Looking at the latest on the blockchain, Worldcoin and its token, $WLD , we analysed a few weeks ago how recent data shows that over 98.52% of $WLD investors are currently counting their losses. Also, figures suggest that in just seven weeks, the $WLD token has lost about 67% of its market value.
Read here:
Less than 2 months after launch, 98.5% of Worldcoin token investors already at a loss
What could be deduced from this is that AI tokens have followed the typical token launch pump and dump pattern.
AI-based or otherwise, there is no love for any altcoins at the moment because markets are currently at their lowest levels for almost two months as crypto winter deepens.
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