How Did the AI Boom Affect the Crypto Market in Q1 2023

Artificial intelligence (AI) crypto tokens have rallied since January 2023, driven by the advancement of AI technologies, with some coins more than doubling in just a few weeks. 

As of February 2023, the market value of all AI tokens was around $1.6 billion, with the top 30 AI tokens all in the green over the last 30 days.

The AI trend has significantly impacted the cryptocurrency market. As AI technologies have become more advanced and widely available, developers have been able to create more sophisticated AI-powered cryptocurrencies that offer enhanced features, security, and capabilities.

This guide will explore AI trends affecting the crypto markets, including the most popular AI crypto projects and the countries most interested in AI crypto.

Let's get right to it!

AI Crypto Tokens

AI tokens are cryptocurrency tokens powered by Artificial Intelligence to improve security, user experience, scalability, etc. They leverage AI algorithms to analyze market trends, predict future price movements, optimize trading strategies, and enhance security. 

The AI trend has led to increased interest in AI cryptocurrencies from investors and traders, who see them as a promising area for potential growth and innovation. As a result, the market for AI cryptocurrencies has grown rapidly, with many new projects and platforms emerging in recent years.

The interest in AI led to a rally in cryptocurrency tokens of projects that leverage the use of AI in their products. For example, due to this increased interest, the gains in AI-powered tokens were far higher than the rest of the market.

CoinGecko's data shows, SingularityNET's AGIX shot up 25% overnight, Ocean Protocol (OCEAN) and Numeraire (NMR) recorded double-digit gains, and Fetch.ai (FET) gained over 250% since January 2023.

The rally comes with OpenAI's ChatGPT's meteoric rise since December 2022. It's worth noting that Microsoft has reportedly invested a whopping $10 billion in OpenAI – the maker of ChatGPT. 

Other AI projects that have influenced the market's AI narrative and the development and adoption of AI cryptocurrencies or tokens are AI language models that can generate such forms of creative output as images and music, among them Midjourney, DALL-E, MusicLM, etc. 

Midjourney is a generative AI model developed by OpenAI that can generate highly realistic images based on text prompts. The model uses a combination of deep learning and natural language processing techniques to create images that match the given descriptions.

DALL-E, also developed by OpenAI, is a more sophisticated AI model that can generate a wide range of images and even abstract concepts that match the given descriptions.

MusicLM is a language model developed by OpenAI specifically designed to generate new pieces of music that sound similar to the original dataset but with variations and improvisations that make them unique. MusicLM is still in development and is not publicly available for use, but it represents an exciting new frontier in the intersection of artificial intelligence and creative expression.

Is AI Crypto the Next Hype?

So is AI crypto driven by speculation and hype?

AI crypto is driven by speculation to some extent, with many investors and traders attracted by the potential for high returns. While this leads to speculation and hype around AI cryptocurrencies, it's worth noting that speculation is not the only driving force behind AI crypto. Many AI cryptocurrencies aim to solve real-world problems and improve the efficiency of various industries. As Zhong Yang Chan, CoinGecko’s head of research, told Decrypt, “Beyond the initial hype, investors and builders should focus on meaningful use cases that combine AI and blockchain.”

Ultimately, AI crypto's success will be determined by its ability to provide real value and solve real problems beyond speculative investments. 

The numbers reported below represent the number of individuals who added AI coins to their portfolio on a specific day rather than daily statistics of the total number of AI Coin holders.

The following graphs demonstrate how the trading volume and market cap of AI coins skyrocketed during Q1 2023: 

AI Crypto Projects

Let's look into some of the new categories of crypto projects focused on merging AI and blockchain technologies.

The Graph (GRT)

The Graph (GRT) is a crypto project that uses artificial intelligence (AI) to do what Google did for the internet and is called the Google of blockchains. It's a decentralized platform for indexing and querying data from blockchains, specifically designed for the decentralized web (Web3). The Graph uses "subgraphs" to create datasets that can be shared across applications. GRT is the Graph indexing protocol's native cryptocurrency, an ERC-20 token that can be stored in Ethereum wallets. 

Fetch.ai

Fetch.ai is a decentralized blockchain platform that uses a combination of artificial intelligence (AI), machine learning (ML), and blockchain technology to create "smart agents" and enable them to interact with each other and various systems in a secure and decentralized way. Smart agents can perform multiple tasks, such as managing energy grids, coordinating transport networks, and facilitating complex financial transactions. The platform is used to build intelligent, autonomous software and tools, making the launch of data analytics, decision-making, and prediction bots possible.
The Fetch platform is designed to be highly scalable, allowing many agents to work together efficiently. FET is the platform's native token used to facilitate transactions on the platform and incentivize participants to contribute to the network.

SingularityNET (AGI)

SingularityNET (AGI) is a decentralized platform aiming to create a "SingularityNET AI network," a global network of AI agents that can interact with each other and perform complex tasks. The network is a platform for developing more advanced AI systems and could potentially be used to solve some of the world's most complex problems.
AGIX token is the platform's native cryptocurrency used as a means of exchange and to incentivize developers and users to access AI services.
SingularityNET has partnerships with several leading AI organizations and has received support from prominent figures in the tech industry, including Elon Musk and Sophia the Robot.

Ocean Protocol (OCEAN)

Ocean Protocol (OCEAN) is a decentralized data exchange protocol focused on data privacy, security, and transparency. It uses AI to enable providers to share and monetize their data securely and effectively and consumers to access data quickly.
The OCEAN token is used as the primary means of exchange on the Ocean Protocol network and is used to pay for data services, access data sets, and reward contributors. The platform is open-source and community-driven. This coin is used to power a decentralized data exchange protocol that enables data sharing and monetization through AI.

Cortex (CTXC)

Cortex (CTXC) is a project that uses a combination of blockchain technology and AI to create a decentralized network and provide cutting-edge solutions to users across various industries. The platform offers multiple AI-related services, including image and video analysis, natural language processing, and predictive modeling used in multiple industries, such as healthcare, finance, and e-commerce.
CTXC is the platform's own native cryptocurrency used to facilitate transactions and incentivize users to contribute to the network.

Numeraire (NMR)

Numeraire (NMR) is a platform that combines artificial intelligence (AI) with blockchain technology to incentivize data scientists to develop machine learning models that can predict the performance of financial assets. Numerai network participants create and train their models using historical financial data and then submit predictions based on the current market. The performance of their models is then evaluated, and successful predictions are rewarded with an NMR token, the native token of the Numerai network.

Numerous other AI tokens have been developed to support various AI projects, such as decentralized marketplaces, market predictions, and portfolio management, and give governance rights to token holders. As of early Feb. 2023, the total market value of all AI tokens was about $1.6 billion; among them: ROSE, the native token of the OASIS network (with a market cap of close to $378 million), used for staking, transaction fee, and governance; ALI tokens used by the Alethea image generator ( known for CharacterGPT) to create images based on input from users, etc.

AI-Powered NFT Art Generators

AI-powered NFT Art Generators have gained popularity in the NFT art market, offering a new way for artists to create and sell their work while also leveraging the power of AI technology. They use Artificial Intelligence algorithms to generate unique digital artworks that can be sold as NFTs on blockchain platforms. AI image generator projects can generate NFTs as playable characters in a Metaverse game.  Some projects incorporate user inputs, such as color palettes or specific styles, to create more personalized and unique digital art pieces.

Some popular AI-powered NFT Art Generators include: 

• ArtBreeder is an AI image generator project to create NFTs by combining different elements and styles. Users can modify color, texture, and style and combine multiple images to create new ones. 
• DeepDreamGenerator uses neural networks to generate abstract and surreal digital art, including da Vinci, van Gogh styles, etc. Users can create unique pieces by uploading images, using pre-made templates, and adjusting such parameters as enhancement, color preservation, iterations boost, image resolution, depth, etc.
• Brain Drops is a non-fungible token (NFT) platform that allows artists and creators to mint and sell their own digital collectibles. The platform has gained popularity for its user-friendly interface and the ability for artists to customize the presentation of their NFTs, and its recent drop, “Life in West America,” took the art world by storm. Brain Drops also offers a marketplace for buying and selling NFTs, allowing collectors to discover and purchase unique digital art pieces directly from the artists who created them.

Other popular AI-powered NFT generators include Ganbreeder, AI Art House, RunwayML, and many more.

Top Countries Interested in AI Crypto

The list of top countries interested in AI crypto can be viewed on Google Trends data with the location set to "Worldwide." As of 17 March 2023, with the two other parameters left to the default options of "All categories" and "Web Search," the country most interested in AI crypto within a month in Croatia, followed by Greece, Netherlands, Romania, Switzerland, Slovakia, Serbia, Nigeria, New Zealand, and Belgium. The complete list can be viewed here.
The country most interested in AI crypto within a year, followed by Singapore, Australia, United Arab Emirates, Lithuania, Netherlands, Qatar, Nigeria, Romania, and Bulgaria. The complete list can be viewed here.

It's worth noting that search trends can fluctuate over time and may be affected by various factors; as such, the peak for AI crypto searches within a year occurred from 5-11 February 2023.

Factors for Determining a Country’s Interest in AI Crypto

A country's level of interest in AI crypto depends on a variety of factors, such as:

1. Government policies and regulatory frameworks: Countries with favorable policies and regulations on cryptocurrencies and AI may indicate a greater interest in AI crypto.
2. Investment and funding: A country's investment and funding in AI and crypto-related startups and research are indicators of its interest in AI crypto.
3. Adoption rates: A country's rate of adoption of cryptocurrencies and AI technologies can indicate its interest in AI crypto.
4. Industry developments: The number and size of AI and crypto companies in a country and the level of innovation and investment in these industries can also indicate interest.
5. Public sentiment: The general public's attitude towards cryptocurrencies and AI can also indicate a country's interest.

Interestingly, the countries that have been at the forefront of AI and crypto technologies, such as the United States and China, aren't on any list of the countries most curious about AI crypto. Silicon Valley has been a hub for AI startups, and the US has some of the world's largest cryptocurrency exchanges, such as Coinbase and Kraken, while China has been a major cryptocurrency market with the world's most significant cryptocurrency mining operations.

Methodology: The study examined data on the substantial increase in the AI coins’ trading volume during Q1 2023 following OpenAI’s ChatGPT’s meteoric rise since December 2022. It specifically explored the market caps, user counts, and pageviews of coins like Cortex, Fetch.ai, Singularity Net, Numeraire, Ocean Protocol, and The Graph. The methodology used involved collecting and analyzing data from various sources to demonstrate the significant surge in AI coins’ trading volume.

Final Words

In summary, the future of AI crypto is an exciting and rapidly evolving field with the potential to enhance the scalability and security of blockchain systems by identifying and mitigating potential threats and vulnerabilities. 

While speculation may be a factor in the short term, the long-term success of AI crypto will depend on its ability to deliver on its promises and provide tangible benefits to users.

However, as with any emerging technology, it's crucial to ensure AI crypto's responsible application, with a focus on security, privacy, and ethical considerations.