AI Crypto Search Interest Drops 64% Despite Market Gains
Online searches for AI cryptocurrencies have fallen by over 64% in the past seven days, despite the sector’s market cap increasing by 15.76% over the same period, according to CryptoSlate data.
AI coins search down
Proprietary data from CryptoSlate also indicates that global AI crypto searches for “AI coins” have continued to decline after a peak on February 7th. Google Trends data, which is not real-time and ends February 16th, shows a sharp rise and fall in AI crypto searches between February 6th and February 10th.
However, the recent decline in search traffic does not correlate with the sector’s market performance, as projects such as The Graph, SingularityNET, Fetch and Ocean Protocol have seen significant gains in the past week. In addition, the AI sector has outperformed most of the crypto industry since the beginning of the year.
AI coin sector
The price of The Graph (GRT) token, the leading AI sector coin, surged 149% in early February, reaching a local high of $0.21. However, it has since retreated 27% against the dollar and 31% against Bitcoin as Bitcoin rallied towards $25,000.
The lack of correlation between GRT and BTC is indicative of the AI sector as a whole. Since the start of 2023, interest in AI has exploded following the launch of OpenAI’s ChatGPT in November. The global focus on AI then led to an increase in the price of AI crypto tokens from the beginning of February.
The chart below visualizes the data by showing the price of BRT denominated in BTC instead of dollars. The blue and orange lines represent the price of GRT and BTC respectively in dollars.
Correlation with Bitcoin
After the local high, GRT has started to move more in line with Bitcoin, in accordance with the typical movement of crypto projects driven by Bitcoin’s price action. The chart below tracks the lagging growth of BRT in blue to the price of Bitcoin.
The correlation with Bitcoin and a drop in search traffic indicates that the AI bubble may have popped. As a result, the retail hype for AI crypto projects may be on the way out, meaning that projects with strong communities and solid fundamentals will now be tested against traders’ desire to take profits.
Comparison with Metaverse pump
Similar price movements occurred after Facebook’s rebrand to Meta in November 2021. Metaverse-related projects such as The Sandbox (SAND) surged 998% in less than 30 days before the hype died down, and the token slowly fell, falling more in line with Bitcoin’s price movements.
Before Meta’s rebrand announcement, SAND tokens, the original token of Sanbox, were valued at around $0.73. Still, as of press time, SAND is trading back around $0.84, up just 15% after a slow 90% decline.
What’s Next for AI Crypto?
While the hype surrounding AI crypto projects is reminiscent of the 2021 metaverse pump, most AI projects are still well below their all-time highs. For example, the top 10 crypto AI projects are all at least 72% down on top, with some as high as 94%, while the metaverse pump took all major metaverse tokens to heights never seen before.
Therefore, while the initial hype may be over for AI cryptocurrencies, the sector is far from dead and the signal may have just been separated from the noise.
Disclaimer: Our authors’ opinions are solely their own and do not reflect the opinion of CryptoSlate. None of the information you read on CryptoSlate should be taken as investment advice, nor does CryptoSlate endorse any project that may be mentioned or linked to in this article. Buying and trading cryptocurrencies should be considered a high-risk activity. Do your own due diligence before taking any action related to the content of this article. Finally, CryptoSlate takes no responsibility if you lose money trading cryptocurrencies.
