AI Alliance Merger Postponed While Apple Event Disappoints: Will AI Tokens Continue to Bleed Red?

AI crypto tokens have emerged as a trending topic within the cryptocurrency ecosystem, capturing the attention of enthusiasts and investors alike.

These tokens have experienced a significant uptrend in the first few months of 2024, reaching a peak in February with soaring trading volumes and market valuations across various exchanges.

Data from Bitget, a cryptocurrency platform, shows that the AI token zone saw a remarkable 400% increase in trading volume throughout February, achieving a total market capitalisation exceeding $39 billion.

This surge has been largely driven by investors flocking to AI-focused projects such as Worldcoin (WLD), Livepeer (LPT), and Arkham (ARKM), whose prices have skyrocketed in recent months.

But despite notable advancements in AI technology, the space remains in its early stages.

However, over the past week, tokens like SingularityNET (AGIX), Fetch AI (FET), and Ocean Protocol (OCEAN) have seen declines of over 20%: FET is down 25.8%, AGIX by 24.0%, and OCEAN by 23.5%.

This contrasts sharply with March, when alliance member tokens rallied following the initial merger announcement.

In addition, AI-related tokens have been languishing, mirroring the broader cryptocurrency market's struggles.

According to CoinGecko, the market capitalisation of AI crypto tokens plummeted by 6% in the past 24 hours, reaching $33.286 billion as of Tuesday.

And at the time of writing, it has dropped further to $31.6 billion, a 7.8% change in the last 24 hours.

The Artificial Superintelligence Alliance Delays its Proposed Token Merger

The Artificial Superintelligence Alliance has postponed the date for its planned token merger, as announced on Tuesday.

The consolidation of AI-themed cryptocurrencies FET, AGIX, and OCEAN into a new ASI token will now occur on 15 July.

The alliance, a collective of AI-focused blockchain developers including SingularityNET, Fetch AI, and Ocean Protocol, initially declared their intention to merge their tokens into the ASI token in late March.

The total supply of the new token is set at 2.63055 billion.

This move is aimed at establishing ASI as the pre-eminent open-source, decentralised network in the AI industry, challenging the dominance of major tech companies in AI development and commercialisation.

The merger date was originally scheduled for 13 June.

Fetch AI CEO Humayun Sheikh, who also chairs the board of the Artificial Superintelligence Alliance, stated that the group is collaborating with centralised exchanges (CEXs) to complete the necessary preparations.

He said:

"Due to technical constraints and the demanding regulatory environment, we recently became aware of the need to delay the merger to ensure we meet the exacting processes required for our tokenholders.”

He emphasized that the delay does not hinder the substantial progress made toward the creation of a decentralised superintelligence network.

He added:

“While the finalisation of the ASI token merger is now scheduled for July due to necessary adjustments by our partners, the commitment and vision driving this alliance remain stronger than ever…Our teams are actively working with centralised exchanges to finalise the remaining steps.”

Ben Goertzel, founder and CEO of SingularityNET Foundation and CEO of the Artificial Superintelligence Alliance, remarked that the three-way token merger signifies a significant milestone.

He anticipates a succession of increasingly exciting developments that will propel the ecosystem's growth.

In a statement, he noted that:

“The finalisation of the three-way tokenomic merger on July 15 will be a major milestone. We anticipate a series of progressively more exciting milestones after that as we leverage our $ASI token-based network to move toward increasingly capable AI systems and, in time, actual superintelligence.”

Bruce Pon, founder and CEO of Ocean Protocol and board director in the Artificial Superintelligence Alliance Council added:

"We appreciate the patience of the community and look forward to a combined $ASI token that is supported by all partners, exchanges and token holders.”

The projects cited the need to meet their ecosystem partners' technical requirements as the reason for the delay.

They explained that the rescheduling is intended to ensure a smooth transition to the new ASI network and token, given the complex integrations and coordination required for the token merger.

Initially, FET token holders were to migrate to ASI through a token migration contract on 11 June, with AGIX and OCEAN holders following at a later date.

Now, all token holders will transition to the new ASI token concurrently on 15 July.

Until that time, FET, AGIX, and OCEAN tokens will continue to be traded independently on exchanges.

Apple AI's Flashy Upgrades Met with Lackluster Response

At the Worldwide Developer Conference (WWDC) on Monday, Apple unveiled its foray into the generative AI domain with the introduction of Apple Intelligence.

CEO Tim Cook presented forthcoming enhancements to Siri, cloud services, and integration with OpenAI's ChatGPT, which had been widely anticipated by observers and enthusiasts.

However, the announcement failed to ignite excitement among investors, who were underwhelmed by the details of Apple's AI strategy.

As a result, Apple's shares declined by nearly 2% during the day, even as the S&P 500 and Nasdaq reached new record highs.

Following Apple's entry into AI, AI-related cryptocurrencies further extended their losses on Tuesday.

According to data from CoinGecko, the AI category of digital assets shed 6% of its total market capitalisation within the past 24 hours, reaching $33.286 billion on Tuesday.

Conventionally, positive AI-related announcements tend to stimulate gains in asset prices, yet Apple's AI initiative did not yield the expected positive response.

Moreover, Elon Musk criticised the tech giant's move, expressing concerns over potential compromises in user security and privacy.

AI Tokens on a Downward Spiral

Cryptocurrencies associated with AI experienced a downturn on Monday, as Apple's much-anticipated annual developers conference failed to enthuse traders.

Tokens such as Render (RNDR), FET, and AGIX saw declines of 3%-5% over the past 24 hours, while Bittensor's TAO fell by nearly 6% within the same period.

Layer-1 network Near Protocol (NEAR) also recorded a 3.2% drop.

This decline occurred amidst high expectations that Apple would unveil its AI strategies and demonstrate how it would integrate artificial intelligence into its products at this week's WWDC2024.

Regarding the Artificial Superintelligence Alliance's decision to postpone their proposed token merger, it remains uncertain whether the delay had an immediate impact on the prices of the three coins involved.

This is because AI-related tokens, along with the broader cryptocurrency market, have been in a slump.

The overall market capitalisation for AI tokens is down 7.8% for the day, as reported by CoinGecko.

The individual tokens of ASI members are also trading in the red: AGIX is at $0.657, down 6.4% for the day; FET is at $1.53, down 6.8% for the day; and OCEAN is at $0.6764, down 5.5% for the day.

Over the past seven days, all three tokens have seen losses exceeding 20%: FET is down 25.8%, AGIX by 24.0%, and OCEAN is down 23.5%.

So What Are AI Tokens?

AI tokens are cryptocurrencies that support AI-based projects, applications, and services within the blockchain ecosystem.

They serve three pivotal roles:

Facilitating Transactions: AI tokens act as the medium of exchange within AI-powered platforms, allowing users to pay for services, access data, and engage in platform activities.

Enabling Protocol Governance: These tokens often confer governance rights to holders, empowering them to participate in decision-making processes that shape the development and direction of the AI project or platform.

Incentivising Contributions: Users who contribute to the growth of the AI protocol or project—by providing data, computational resources, or developing AI applications—can receive rewards in the form of AI tokens.

Despite their significant roles, AI tokens remain technically complex and volatile, similar to most cryptocurrencies.

AI Tokens' Downturn is Short-Term But Others Unconvinced

Crypto trader Matthew Hyland believes that the downturn would not last forever.

But some sceptics question the intrinsic value of AI tokens.

In a recent report, Coinbase analyst David Han posited that AI-related tokens might be driven more by hype than by genuine value, particularly in the short to medium term.

Although he recognised that certain crypto-AI tokens still offer profitable opportunities, he emphasized that the long-term viability of the ecosystem will depend on more than just the decentralisation of AI components.

In a more critical assessment of the market, Albert Edwards, the chief global strategist for financial services giant Société Générale, drew parallels between the AI token frenzy and the numerous financial bubbles observed in history.

He pointed out:

“Every bubble has a compelling narrative. The current narrative centers on the anticipation of an AI-driven surge in corporate profits to fully justify the current stratospheric valuations. Those of us who lived through the late 1990s [tech] bubble have heard it all before and roll our eyes skyward."

Toufi Saliba, CEO of HyperCycle, a blockchain project connecting AI machines, said:

“Whether this growth is sustainable in the long term will depend on how effectively projects like HyperCycle, SingularityNET, Fetch.ai, Ocean Protocol, and other decentralised AI technologies continue to evolve and deliver value to businesses and consumers."