Coinbase: The value of AI tokens may be overestimated as a result of the hype around the technology

What’s new? The rapid rise in token rates of artificial intelligence-based blockchain projects reflects more hype than actual usage, says David Khan, an analyst at US crypto exchange Coinbase, in a new report. He says the value potential of many AI tokens may be overstated as a result of the growing interest in the industry, while many such assets may lack sustainable demand factors even in the short term.

Coinbase’s report

What else is known? According to data from aggregator CoinGecko, the capitalization of the AI token market grew by 30% to $26 billion on March 7 alone. The growth occurred against the background of the announcement of the conference of the US manufacturer of graphics processors NVIDIA, dedicated to AI-technologies. NVIDIA GTC AI 2024 will take place on March 18.

Overall, 2024 AI tokens outperformed the broader crypto market in terms of yield growth. For example, Akash and Render coin rates are up 146% and 99% YTD, while bitcoin has added 54%.

It is also notable that the returns on many AI tokens have outperformed stocks of companies operating in the sector, including NVIDIA and Microsoft. Nevertheless, the outlook for most of these projects is uncertain, Han states.

Separately, Han looked at the situation with the decentralized platform Akash Network, where users can rent their hardware for cloud computing. Thus, as more and more users connect their systems to the network, the size of their rewards are decreasing due to insufficient demand.

As a result, according to the analyst, Akash and similar projects will have to change their reward distribution structure, as failure to match the technology hype could eventually lead to price adjustments.

By March 8, the AI token market capitalization had corrected to $25,42 billion. The segment leaders are Bittensor (TAO), Render (RNDR), and Fetch.ai (FET). A day earlier, TAO was the leader on the Futures NEXT listing prediction platform from crypto exchange Binance. Thus, the majority of users bet on the asset, choosing it as the most likely candidate for listing on Binance Futures.