Crypto AI prices have outperformed the rest of the market by a large margin in 2024. Coinbase Researche says most crypto AI projects are hype rather than real benefit. That’s why he warns against bold claims from crypto platforms that talk about major disruptions.
Coinbase warns: Crypto AI projects are a big hype!
cryptokoin.comAs you’ve been following from , we’ve witnessed major frenzy surrounding crypto AI projects in recent weeks. Crypto exchange Coinbase has issued strong warnings stating that the mega rally in several AI crypto projects is more of a hype rather than real benefit. According to the report written by David Han, a research analyst at Coinbase, the projects face significant obstacles. That means there is tough competition and technical hurdles that can significantly hinder their progress. In this context, Khan wrote:
Our opposing view is that the value potential of many AI tokens may be overstated as a result of broad interest in the AI industry, and that many AI tokens may lack sustainable demand-side drivers in the short to medium term.
He also added that crypto AI products face an “uphill battle against broader market and regulatory forces.” Coinbase talks about the technical hurdles associated with decentralized networks, which form the core concept of crypto-AI projects. This, he argues, would further increase the difficulty.
Nvidia wind blew AI tokens!
According to CoinGecko data, the total value of crypto AI projects has increased to $26 billion this year. Notably, nearly 30% of these gains have come in recent days, driven by another rally in shares of Nvidia, a leading provider of chips for artificial intelligence applications. Nvidia’s shares are up 15% this week. Despite this rise, Coinbase continues to act cautiously due to the rapid development of artificial intelligence.
AI prices have outperformed the broader crypto market in 2024. Tokens like Akash and Render have seen notable gains of 146% and 99% respectively since the beginning of the year. In the same time period, leading crypto Bitcoin rose 54%. However, Han notes that the outlook for many of these projects remains uncertain.
AI hype and obstacles
David Han notes that the rise in crypto AI projects is largely fueled by the hype surrounding artificial intelligence. “AI tokens generally experience significant gains along with the broader crypto market,” Han said. “It is also often influenced by AI-related news headlines,” he wrote. According to Han, numerous Crypto AI tokens have outperformed AI-related stocks such as Nvidia and Microsoft in recent months. Han also stated that the value of artificial intelligence tokens may increase even when Bitcoin prices fall due to what he calls “memetic speculation.”
This phenomenon occurs when speculators invest in a project based on hype rather than its actual utility and adoption. Han warns that such speculative behavior could result in a price correction if the technology fails to live up to the hype.
Coinbase analyst gives Akash Network as an example!
David Han highlights Akash Network as a crypto AI project facing imminent challenges. The project encourages users to use their computing power for cloud computing. Thus, it provides a decentralized alternative to services provided by giants such as Amazon or Google.
Akash Network describes itself as the “Airbnbb for data centers.” While Akash observes that usage is increasing, Han notes that potential supply and demand imbalances are starting to emerge. As more users add their systems to the network, their earnings decrease due to insufficient demand.
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