Crypto x AI makes up just 1% of crypto market cap, says analyst

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As an analyst with over two decades of experience in the tech and finance industries, I find myself intrigued by the burgeoning Crypto x AI sector, as highlighted by David Cheung and others. The potential for growth in this niche market is undeniably immense, given its current minuscule representation (1%) within the broader crypto market cap.

According to David Cheung, the Crypto-AI field accounts for only a 1% share of the total value in the crypto market. Yet, he anticipates that this segment could potentially expand further.

David Cheung shared on platform X an assessment highlighting significant growth possibilities for cryptocurrency and artificial intelligence, a sector that currently represents just 1% of the $3.83 trillion crypto market (Crypto x AI). As co-founder of Syncracy Capital, which conducted this analysis, he noted that Crypto x AI is still in its early stages relative to DeFi, which reached 6% of the total market cap in 2020.

He also emphasized that the early positioning will stand out as a great opportunity for exponential growth, and Crypto x AI is well-placed to come out bigger in shares in the future years. Cheung is not the only one who expects the crypto x AI market to boom. 

Although Crypto x AI has experienced a significant rise recently, it currently represents only about 1% of the entire crypto market’s value. However, given its potential for growth in this cycle, especially with the top AI Infrastructure, AI Agent Platforms, and AI Agents delivering exceptional returns, there’s a strong possibility that it could increase by ten times or more. It’s still an early stage in its development.

— Daniel Cheung (@HighCoinviction) December 12, 2024

According to influential figures such as investor Andrew Kang, AI is expected to play a crucial part in cryptocurrency trading. In the coming days, skilled human traders may no longer directly execute trades but instead program their strategies into AI systems that can make decisions autonomously and efficiently. This shift towards AI-driven trading reflects a broader movement where traditional manual tasks are being automated by advanced AI models.

In the not too distant future, proficient discretionary traders won’t manually execute trades as we know it today. This would be comparable to solving complex mathematical problems without using a calculator. It’s inefficient, outdated, and belongs to an era gone by.

— Andrew Kang (@Rewkang) December 12, 2024

According to Jaspere De Maere of Outlier Ventures, there’s a compelling synergy between these two technologies given their data-centric nature. Furthermore, he emphasizes the necessity of integrating them swiftly, as we strive to address the limitations of each technology, which are increasingly being used by billions of people worldwide.

The current challenges in the Crypto x AI sector

The integration of Cryptocurrencies with Artificial Intelligence brings forth certain hurdles, such as maintaining data confidentiality and ensuring system security. Additionally, the protection of sensitive information proves to be a challenge due to widespread misinformation and an abundance of data that can affect the dependability of AI. Furthermore, algorithmic biases and centralization tend to obstruct the aim of decentralization. Lastly, AI-controlled bots are gradually undermining trust and authenticity within blockchain networks, making interactions between users more complicated.

The future outlook:

2024 has witnessed an escalating trend of active investor engagement in cryptocurrencies that specialize in artificial intelligence, such as NEAR Protocol (NEAR), Fetch.ai (FET), and Bittensor (TAO). This growing involvement indicates a heightened interest in AI-driven crypto projects. Notably, the tokens endowed with AI capabilities have experienced a surge in trading activities throughout the year 2024, potentially paving the way for broader adoption.

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2024-12-12 15:26