Even AI can’t make up its mind sometimes. The industry is generated a ton of hype, but crypto tokens pegged to the technology have aren’t seeing big gains.
Crypto data provider Kaiko writes that interest for AI-affiliated tokens has remained flat despite the billions of dollars that have poured into AI startups.
Overall, writes Kaiko, interest is down, although at second glance, the numbers tell a mixed story.
Kaiko analyst Dessislava Ianeva, total interest for five of the top AI tokens (referring to FET, GRT, RNDR, OCEAN, and ROSE) plummeted from $170 million earlier in the year to just $60 million in August.
According to Kaiko, despite the controversial and much-anticipated Worldcoin launch causing a spur of the moment spike in interest, it quickly faded away. Its WLD token, wrote the research center, underperformed Bitcoin and most altcoins, registering the largest drop of more than 50%.
The decline among AI tokens, says Ianeva, is due to a shift in global risk appetite.
She said the drop has been driven mainly by concerns relating to China, a country that has sparked fears due to its alleged economic slowdown.
“China is impacting risk sentiment,” Ianeva explained, especially as the crypto market lacks a narrative. The analyst pointed out that even though NVIDIA posted record high revenue, “it failed to generate enthusiasm,” which according to her, indicates that lesser interest is broad-based among industries.
Kaiko reported that some projects did gain traction, notably Fetch.ai (FET) and Ocean Protocol, the former posting a near 90% surge in open interest during the previous month.
And while open interest has taken a nosedive as of late, weekly trade volumes for AI related tokens increased considerably during August. Kaiko revealed that after plunging to yearly lows of $570 million in late July, these jumped to $870 million last month.
These somewhat bullish numbers showcase “heightened competition for capital within the market,” says Ianeva. Considering the current macroeconomic scenario, which she calls “challenging,” only “the most innovative projects will attract capital.”
Ianeva is optimistic about the near term future, nonetheless.
She told Decrypt that “October is historically one of the best for crypto,” and with markets being forward looking, traders will “start positioning for the Bitcoin halving and spot Bitcoin ETFs.”
As for the macro environment, she concluded that “it could also be more supportive for risk assets as the Fed’s peak rate has passed.”