Market Overview
In the last seven days, Bitcoin (BTC) experienced a significant slide to $81,000. The CMC Fear and Greed Index reached an all-time low of 10, and most altcoins suffered heavy losses as bear market fears intensified.
Unfortunately, the AI sector was not immune to the market downturn this week, experiencing one of its most severe seven-day declines on record.
AI Market Recap
The AI sector faced another punishing week, shedding an additional $3.6 billion from its market capitalization due to a 14.7% drawdown.
Consequently, the vast majority of AI tokens are showing significant losses on the seven-day chart. The 10 largest assets experienced some of their worst weekly declines of the year so far.
Among the top 10 AI tokens, Artificial Superintelligence Alliance (FET) demonstrated relative resilience, losing only 2.3% week-on-week, a rare display of strength in the current market.
Currently, only 12% of the 100 largest AI tokens are in positive territory, indicating the broad impact of this week's market correction.
The tokens that showed the most resistance to the decline include:
- •Intuition (TRUST): +62.1% (attributed to the Biconomy trading competition)
- •Grass (GRASS): +24.3% (driven by speculative bids ahead of the first Token Holder Call)
- •LimeWire (LMWR): +19.8% (with an unclear catalyst)
- •Kite (KITE): +18.6% (also participating in the Biconomy trading competition)
The trending list for this week is predominantly composed of tokens in the ~$30 million market capitalization range, suggesting increased interest in smaller-cap assets.
On the other hand, the week's worst performers were:
- •Nillion (NIL): -59.6%
- •ChainOpera AI (COAI): -33.5%
- •DeAgentAI (AIA): -33.3%
- •Quack AI (Q): -33%
Overall, the AI sector has now retraced nearly two years of growth, with its market capitalization falling back to levels not seen since December 2023.
However, this decline is not isolated to the AI sector. Data from Artemis indicates that almost all digital asset categories are in the red on the weekly timeframe. When ranked by the decline in their weighted average fully diluted valuations, the AI sector has actually held up slightly better than most during this historic drawdown.
Navigating Market Turbulence
Here are strategies to survive and potentially thrive during periods of market turbulence:
- Identify asymmetric opportunities: Excellent risk-to-reward opportunities are present across the market. Consider identifying emerging trends among this week’s gainers list.
- De-risk if overexposed: If being wrong about a position would significantly compromise your financial standing, consider reducing exposure or taking some profits.
- Reconsider your thesis: Evaluate whether your investment thesis remains relevant in the current market environment. If not, consider revising it using up-to-date data and objective analysis.
AI News Roundup
Below is a recap of the week's most significant updates to keep you informed about the AI market.
Cardano Hit by 'Vibe Coded' AI Exploit Narrative
Cardano experienced a temporary chainsplit after a user tested an old node bug using AI-guided "vibe coded" instructions. This incident sparked debate regarding AI-written exploits. Cardano founder Charles Hoskinson described the event as a personal attack and confirmed that the FBI is involved.
Numerai Secures $30M To Scale AI-Powered Hedge Fund
The AI-driven hedge fund Numerai has raised $30 million in a Series C funding round led by prominent university endowments, valuing the company at $500 million. The funds will be used to expand its AI engineering team, enhance its data-science tournament, and develop its institutional product suite as it aims to reach approximately $1 billion in assets under management.
Bezos Launches $6.2B AI Startup Project Prometheus
Jeff Bezos is returning as co-CEO to lead Project Prometheus, a new AI startup with a $6.2 billion valuation. The company aims to develop "physical world" models for engineering and manufacturing. Project Prometheus is co-led with former Google X scientist Vik Bajaj and has attracted talent from leading AI firms such as OpenAI, DeepMind, and Meta.
https://twitter.com/SawyerMerritt/status/1990449341471814111
That concludes this week's update. Check back next week to stay informed about the pulse of the AI market.