Analyst Explains Rise in Prices of AI Tokens Due to Industry Hype
Date: 2024-03-08 Author: Dima Zakharov Categories: BLOCKCHAIN
Industry Hype Behind AI Token Price Surge
Analyst David Han from Coinbase shed light on the recent price hikes in AI tokens, indicating that the rally reflects more on the industry's hype rather than the tangible benefits of their usage. Han expressed concerns about the sustainability of demand for these projects in the short and medium terms.
Market Capitalization Growth
CoinGecko data reveals a significant spike in the market capitalization of AI-related tokens, reaching $25 billion this year. Notably, approximately 30% of this growth occurred on a day when Nvidia's stocks surged dramatically.
Technical Challenges and Competition
Han emphasized the technical challenges faced by decentralized networks, complicating their competition with traditional market leaders. He cited Akash Network as an example, highlighting the platform's payment to users for cloud computing power usage. Despite growing usage, Han warned about potential demand and supply issues arising as more participants join the network.
Future Prospects and Competition
Han concluded that AI cryptocurrency projects aim to lure users away from centralized platforms like Amazon Web Services or ChatGPT. However, their success hinges on offering something novel and useful before investors shift their focus elsewhere.
Overall Growth Trends
Earlier reports from CoinGecko indicated an average increase of 260% in AI token prices since the beginning of the year.
