This is the AI x Crypto Cycle

AI x Crypto is real. The fundamentals are there & so is the speculative degeneracy.
Mar 6, 20247 min read

Every bull market cycle gets defined by the mania it incubated. 

  • 2013 was the “Proof of Work fork-and-fair-launch” era
  • 2017 was the ICO mania
  • 2021 was the NFT bubble

I’m calling it now:

The 2024 cycle will be remembered as the AI x Crypto cycle. 

Two parallel industries are each fueled with a massive amount of potential energy, and are on a collision course to produce a bubble of epic proportions. 

The dollar inflows into the BTC ETF is jet fuel being pumped into the rocket ship that will soon blast capital downstream towards the risk-on half of the crypto markets. Soon, likely either in May or November, the ETH ETF will be approved and further capital flows will pump the blue-chip side of the crypto market, giving people the ammo they need to start hunting for low-cap 100x’s, as is tradition in every bull market. 

Meanwhile, Nvidia’s $2.2 Trillion dollar market cap has almost single-handedly captured this narrative growth on the trad stock market. Tech giants like Google and Microsoft are driving Web2 to capture the AI zeitgeist and transform the future of tech markets. Adding to this, Silicon Valley is continuing to push the vast majority of startup funding towards AI bets.

The age of AI is upon us. 

There is only one problem. AI without crypto is a massively centralized phenomenon, where Web2 companies and their leaders control all the wealth and power that AI brings. This is a problem statement long touted by AI thinkers and philosophers long before AI ever came into public awareness, and now the centralizing problems that AI brings to wealth and power are coming ahead. 

A salient quote from Peter Thiel:

Crypto is decentralizing, AI is centralizing. Or, if you want to frame it more ideologically, crypto is libertarian, and AI is communist."

Crypto and AI are on opposite sides of the spectrum, but they are not opposing forces. They are better together, and together, they will create a whole greater than the sum of its parts. AI needs crypto in order to not produce a centralized dystopian oligarchic hellscape, and crypto needs AI for all of its utility and power!

Unpacking the AI Crypto Investor Narrative on Bankless
The AI sector of crypto seems poised to rip this cycle, but why?

Decentralized AI

I think we’re going to hear the phrase “Decentralized AI” a ton in 2024. This very simple memetic package contains a lot of information and meaning in a very simple phrase, “AI, but for the people.

Centralized, Web2 AI has massive monopolies over data and compute. They will put all their resources behind the development of their AI models, in order to produce the most generalized & powerful model possible. They will smother competition and constrain innovation. They will go for regulatory capture and try to entrench themselves as best they can. They will make very few people extremely wealthy and powerful, and they will be our new overlords. 

I was listening to Casey Curaso speak at the ETH Denver AGI summit:

“We all want open source AI, and a wide proliferation of models custom fit for various uses, but the tailwinds behind the economies of scale for AI models are very strong. Data monopolies and compute monopolies restrict open AI model development”

The idea here is that we are interested in a wide set of AI models – models for everything: models for music, movies, art, personal assistance, trading algorithms, recommendations and curation…

We, as humanity, want to have as many AI models as there are blogs and websites. By democratizing access to AI models – human creativity, expression, and value creation would flourish. 

But we can’t have that because of Centralized AI. 

We need Decentralized AI. 

Decentralized Compute

The foothold for the AI x Crypto narrative begins at the decentralized compute layer – the bottom-most stack of the AI x Crypto tech stack. 

Decentralized Compute has been a crypto sector for a long time now – there’s nothing new here. The only thing that’s new is the massive price action that these platforms have seen since the rise of the AI investing cycle. As Nvidia piles on billions upon billions of dollars into its market cap, and OpenAI launches new AI products that redefine society, the bid behind the decentralized compute platforms grow. 

These are just the four platforms I’ve picked from the crowd. There are hundreds of others, with wildly varying levels of quality, that have made massive moves in the past few months.

Some of these platforms have real fundamentals. Some of these are actually experiencing growth due to the rise of the AI sector.

But by in large, their price action is completely speculative and based on either perceived future adoption by the AI sector, or perceived future greater fools. 

In my opinion, it's the latter. 

AI Memecoins

Worldcoin is a very real project, with a very real founder, real team, with a real vision, and it’s currently has a very unreal valuation of $63 billion dollars, that can only be explained by people trying to get exposure to AI, and they’re using WLD to do it. 

This is what crypto offers the AI industry: tokens and liquidity. 

AI Memecoins & Lessons for Narrative Investing on Bankless
Guidelines for this bull market are a necessity

Our industries are comprised of fast-moving radical innovators who are pushing the limits of what technology can do.

We ask, "Why not?" and then we ask for forgiveness.

The pace of regulation and public market bureaucracy is unsatisfactory and constraining. We, as Crypto x AI, are not going to wait for the old guard and the powers-that-be to catch up with us, we’re going to blaze past them and build a better future. 

But, before all the AI builders learn to use crypto, and before all the crypto builders learn to use AI, we will first be hit by a tidal wave of AI memecoins that will be able to outpace both of them. 

The AI x Crypto overlap is real – it’s just going to be front run by total vaporware and shitcoinery.

It’s simply the order of operations one would expect.

It’s easier to ship and shill an AI memecoin than it is to build a real project. Real Crypto x AI projects will take a minimum of a few years to build, and we don’t have that kind of time inside of a crypto bull market that lasts 12-18 months at best. 

AI tokens are the shiny new thing. 

The reason why AI tokens are bullish is because it takes absolutely zero brainpower to buy them. Incoming retail investors will simply find some AI related ticker, watch one youtube video on it, and then smash the buy button. 

This is what we call the left side of the curve, and it’s why CorgiAI pumped into the top 100 coins. 

The first page of the CorgiAI “whitepaper” is about all you need to know. 

It’s dumb. It’s going nowhere. It’s cute and funny. And it’s what happens when the masses is given access to the printing-press of financial assets: The ERC20 token. 

Here’s a take from Jacob from Zora that I liked: 

And meanwhile, look at what I found while cruising is timeline: actual, real innovation using Crypto x AI!

What Comes Next

Bankless Nation, welcome to the next 18 months of your life.

AI x Crypto is real. The fundamentals are there. And the signal around the fundamentals is going to be completely drowned out by the next wave of crypto speculative degeneracy.

Crypto projects will find ways to make themselves a Crypto x AI project, and then their token will pump as a result of it. 

And then it will all come crashing down.

And then we will rebuild it all again on a better foundation than what we had before. 

As is tradition 🫡

AI Agents Are Crypto’s Next Big Catalyst on Bankless
The AI agent economy is here. Here are 7 areas where they’re taking over.

Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.

Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here.

Account Light mode Log Out