State of the market: Crypto x AI

In this report:

• AI Agents in Crypto
• The explosion of AI Memecoins
• An update on AI Compute assets
• Market Challenges and Future Potential   

Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.

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The AI-crypto synergy

For years, we have been bullish on the synergies between AI and crypto. We've been big fans of AI agents, where Olas and ASI showed promise, and have recognized the potential of decentralized computing through platforms like Nosana and IOnet. Blockchain and AI integration has long been promising, yet the challenge has been identifying assets that align with our investment criteria.

Yet, we see the convergence of AI and crypto as a big deal that could potentially reshape entire industries. By combining AI's computational intelligence with blockchain's secure, transparent, and decentralised structure, a powerful synergy can emerge.

Imagine AI agents autonomously operating on a blockchain, executing transactions, analysing market data, or even interacting with other decentralised networks—all in a transparent, tamper-proof environment. This autonomy makes AI not only a tool but a true participant in blockchain ecosystems, free from centralized oversight. We even envision the future where the majority of blockchain transactions will be carried out by AI.

Though we’re still in the early days of Crypto x AI, the potential is undeniable. Recently, several narratives popped up around this convergence, and we have been closely watching. So, without further ado, let’s dive into the most exciting things that are happening in the Crypto x AI space.

AI agents

Let’s start with AI agents, as they are what makes us the most excited. As a quick refresher, AI Agents initially allowed seamless crypto integrations into people's everyday tasks, decreasing the learning curve. Essentially, if you wanted to do something on the chain instead of going through the complex processes, you could have AI assist you or do it for you. They also have been used as helpers when assessing risk in protocols and smart contracts.

However, recently, the sector has reached a new milestone: AI Agents are evolving into autonomous influencers, capable of running social media, engaging followers and executing on-chain actions independently. The two most recent examples are Terminal of Truth and Luna, each “shilling” their coins through Twitter accounts. However, the Terminal of Truth's coin was created by a human. At the same time, Luna is completely doing things on its own and can hire people now to help it reach its goal of a $40B market cap.

Such developments are no surprise since the sector now has AI agent platforms like Virtuals. It's a platform where you can create, own, and even co-own AI agents/influencers in a few clicks. Think of these AI influencers as the digital equivalent of those TikTok stars that dance for likes, except these ones are powered by AI and blockchain magic. 

Virtuals has a token $VIRTUAL that is used to pay the platform when creating AI agents. Looking at the chart, we can see that we have now had the initial hype run-up, and now we are in the first dip. To us, this is where new narratives can show if they have staying power. So, while we would not look to invest in this token now, we would look into it more if it can continue having good upside momentum in the future.

Similarly, looking at the chart for Luna, it pretty much mirrors the same hype pump and now the dip. Admittedly this chart looks quite bad which is why we stay adamant on investing in things that have staying power over time and not a couple of days. 

Closing thoughts

The most bullish thing about AI agents is that they attract crowds, retail and crypto natives alike, while having less of the gambling narrative that meme coins have. The sector is relatively young and small. However, it is already showing some promise.

Nevertheless, we have seen many hyped narratives come and go (e.g Telegram bots, Intents, SocialFi, decentralized storage, and many more). Investable tokens need to survive the hype phase to have staying power. Therefore, we are all eyes and ears for now, however we would not invest in this sector at the moment.

AI Memecoins

A quick refresher: AI meme coins are led or created by an AI agent. AI and Memes alone make up over 30% of the total mindshare of narratives in crypto, making synergies between the two narratives extremely exciting.

There weren't many new things in this space until this month with the launch of $GOAT, which reached $940m market cap, and with it, derivatives of the idea, notably $GNON, which also reached $130m market cap.

GOAT is a meme coin co-created by Terminal of Truth, an AI Agent Twitter account, and its owner. The token was based on an old meme called Goatse. The launch of the coin went incredibly well, and Terminal of Truth has become the first AI Agent millionaire with assistance.

The driving narrative behind this coin is that it is a meme coin created by an AI agent; however, upon further investigation, we found that this simply is not the case. Coinbase CEO Brian Armstrong also commented that the Agent doesn't even control its wallet, which they can do.

Looking at the chart of $GOAT, we can tell that currently, there is support in the $500m region however, with decreasing mindshare and less overall activity on Terminal of Truths Twitter page, we are more inclined to wait for this chart to show upward momentum before thinking of getting in.

We can also see that the mindshare of the coin itself is also on a decline and while early it seems it could be bringing price along with it.

So, because this isn't truly a pure AI-made coin, the chart is in a corrective channel, and the decreasing hype is bringing lower prices, we would not be looking to acquire this coin now.

Closing thoughts

Overall, we do like the idea of AI Memecoins as a whole, and we do see how this space can be poised to take off. However, the options of coins available right now do not excite us, nor do the charts, making us take a backseat to the current AI memecoin meta.

AI compute

Next up in our review are AI Compute projects, and a quick rundown of why this space exists is that AI technology requires a lot of computing power to train and run complex models used for AI to make decisions. Therefore, demands grow as the space gets more extensive, and so does the need for top-quality GPUs, which means the price for these things tends to skyrocket! That brings the need for products that decentralise computing power to make it more affordable and available for smaller fish in the pond. So far this year, there haven't been any significant innovations new in this space; however, there are some new updates to share when it comes to our AI computing picks

IONET

IONET has recently been listed on Coinbase, and the tech continues to be used by many, increasing quickly. As a reminder, IONET is a project that allows people to monetise their idle GPUs and let others use that GPU power at a more affordable rate, almost like renting it.

So far, IONET continues to perform in terms of revenue and users and is being used worldwide. From this image, we can see that the growth and demand for products like this are not dwindling but growing worldwide, making us believe that this project will continue to have staying power.

However, the chart is going the opposite way for now. We can see that IO has been struggling to attain any momentum for the past couple of months and has been slowly bleeding out. The promise is interesting, but we aren't looking to invest for now because of the price action.

NOSANA

For those who don't know yet, Nosana is a decentralised GPU platform that makes these GPUs more accessible to people, similar to $IO. After all, they are both in our AI Compute section. Currently, Nosana is in Test Grid Phase 3, with their Mainnet launching on January 14th, 2025.

This Mainnet is said to bring

• Nosana Console
• Client SDK
• Dynamic Pricing
• & an unrestricted GPU grid

As we can see, the devs are cooking.

Unlike $IO, the $NOS chart looks quite constructive. While we have run into some resistance here, we do believe that $NOS should continue to perform well. 

From what we can tell, investing in these tokens in this cycle comes with a mixed bag when it comes to returns; on the one hand, IO stays relatively flat, while Nosana has upward momentum. Nonetheless, the tech is being used and improving, so we remain bullish on the space and the tech itself.

Closing thoughts

Overall, AI computing continues to be a foundational piece of the AI Crypto landscape as demand for affordable, decentralised computing power grows. While the space has seen steady, rather than explosive, innovation this year, the value of these platforms and our picks remains clear, and the teams continue to build. As demand and tech continue to advance, this space is one to watch for its resilience and long-term bullish potential.

Bonus

Among all AI related coins one seems to be standing out. The AI coin that has the most mindshare in crypto this year is TAO, which is a marketplace that transforms machine intelligence into a tradable commodity. Recently, TAO has had two big upgrades, Dynamic TAO, and EVM compatibility; these updates make TAO and its ecosystem less about passive yield and propel it into a new paradigm. For Dynamic TAO, it means that investors, users of bittensor (TAO) and its ecosystem will have more lucrative opportunities. For EVM compatibility, more intelligent contracts and on-chain apps can be built, meaning more opportunity for demand to increase for TAO. Mindshare-wise, TAO has the biggest dominance out of the whole AI sector. To us, this means that the tech is sound, people are using it, and it should be something we keep an eye on as the AI narrative heats up.

But, once we look at the chart, we can see that it doesn't look too strong, especially with BTC nearing all-time highs; however, if we were in from lower prices earlier in the year, we want to see the price stay above the $480 level. Additionally, 50% of the circulating supply is expected to hit the market within a year. From what we have found, people are really trying to make a case for low float, high FDV tokens. Thus, there is a discrepancy between mindshare and price action.

Closing thoughts

We would not invest in this token because the coin looks weak amidst general strength in the crypto space. Admittedly, bitcoin's dominance is high. But even as we take a deeper look into the mindshare and general sentiment, we can see that it is in the gutter, and the price reflects that as well. However, this does not mean we take it off our watchlist; we believe the tech is legitimate and the team is good, so in the future, if the chart starts to show strength and the circulating supply becomes investable, we would love an opportunity to get involved!

Cryptonary’s take

As the AI and crypto landscapes merge, we’re witnessing a pivotal moment where hype, innovation, and potential meet. AI agents are not only simplifying complex crypto interactions and auditing smart contracts but are evolving to run cult-like communities. Projects like Luna and Terminal of Truth illustrate this, transforming AI from a backend tool to a fully on-chain participant who can influence markets.

Meanwhile, demand for AI computing power is skyrocketing, as is innovation on decentralised GPU networks like IOnet and Nosana. These platforms make high-powered processing accessible worldwide and show signs that the growth will continue.

Yet, the bigger question remains: can these projects withstand their hype phases and prove their real value? For now, the AI-crypto fusion feels unstoppable, and the tech shows that only the strong will survive. Just because the tech does, it doesn't mean the tokens will perform well in tandem. Therefore, despite the hype and narrative, Nosana stands as one of the reliable picks for the AI narrative. However, we will still be cautious and will not get overexposed to this space for now.

Peace!

Cryptonary, OUT!