Coinbase Warns of Surge in Crypto AI Projects

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    According to Coinbase, hype plays a big role in the rise of crypto AI projects. News often has an impact on the broader market, which helps increase the value of AI tokens.

    Analysts have warned that the artificial intelligence (AI) token market may be more hype than actual value, which could explain the recent price spike.

    According to the report, written by Coinbase research analyst David Han, several key factors raised questions about the long-term viability of the token. Furthermore, in the future, intense market competition and technical difficulties prove to be practical barriers to the adoption of AI tokens.

    Also read: AI startups shine in Q1 as venture capital funding surges 40%

    The reason why prices are rising is A.I. Widely used in many industries. Still, Han believes this may be an exaggeration of the situation, given that maintaining the status quo requires long-term sustainable conditions.

    AI projects face major hurdles

    according to report According to Coinbase research analyst David Han, the project faces intense competition and technical challenges that could seriously hinder progress. Mr. Han said:

    Our paradoxical view is that the potential value of many AI tokens may be overestimated due to widespread attention to the AI ​​industry, and that many AI tokens do not have sustainable prospects in the short to medium term. The idea is that the driving force on the demand side may be lacking. ”

    He went on to say that crypto AI products face “an uphill battle with the broader market and regulatory forces.” According to Coinbase, this challenge is made even more difficult by the technical hurdles associated with the decentralized networks that form the basic concept of crypto AI projects.

    According to data from CoinGecko, the total value of crypto AI projects has increased to $26 billion this year. Notably, approximately 30% of these profits the last day, boosted by a resurgence in the stock price of Nvidia, a leading provider of chips for AI applications. Nvidia's stock price rose 15% this week.

    Despite this surge, Han boldly argues that crypto-focused platforms are uniquely positioned to disrupt the industry. but, coinbase AI is evolving rapidly, so be cautious.

    In 2024, the price of AI will outperform the broader cryptocurrency market. Since the beginning of the year, tokens like Akash and Render have seen impressive gains of 146% and 99%, compared to Bitcoin's 54% rise. However, Han pointed out that the future of most projects remains uncertain.

    AI tokens may be overhyped.

    The proliferation of platforms such as Hugging Face, which hosts over 530,000 AI models publicly available, and the culture of open source models Crypto AI space.

    This transparency fosters both competition and teamwork. Additionally, in some cases it is possible to create models that outperform closed-source alternatives. Additionally, the trend towards more affordable and smaller models points to a future where artificial intelligence may be more widely distributed and integrated into a wider range of applications.

    David Han highlights the unpredictability and volatility of AI tokens, especially those with fixed tokenomics models. While AI is advancing with great promise, he warns that there are real-world obstacles that could hinder widespread adoption.

    The need for a prudent investment strategy is highlighted by the rapid evolution of AI technology and the speculative nature of AI token performance highlights.

    However, Han said he believes a number of short-term sustainable demand drivers still need to be added. A.I. Narrative trade. The lack of clear adoption projections and metrics has allowed for widespread memetic speculation, which, in their view, may not be sustainable in the long term. Eventually, price and utility will converge. The open question is how long it will take and whether electricity prices will increase commensurate with the price or vice versa.


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