Coinbase Drops Warning: The AI Crypto Bubble That’s About to Burst

The post Coinbase Drops Warning: The AI Crypto Bubble That’s About to Burst appeared first on Coinpedia Fintech News

AI projects are seemingly being overhyped and under-delivering, raising questions about their long-term credibility. While AI tokens are registering huge profits despite other tokens’ plunges, the long-term implications of these tokens will have to face many technical hurdles and will require more than just decentralizing.

One of the primary hurdles is, that crypto primarily focuses on decentralization while AI  relies on heavily centralized data sources.

Can Hype Lead to Price Corrections?

Despite the negative outlook, many AI tokens have recently outperformed Bitcoin and major stocks like Nvidia and Microsoft. The AI tokens have performed positively even when Bitcoin was trading negatively. This was due to the market sentiment in the broader crypto market and induced AI news Headlines.

When speculators invest in a project based on its hype instead of considering its utility and adoption, such activity may lead to price corrections if the technology cannot meet the hype. Therefore, questions are being raised over the bold claims of crypto platforms over their significant disruptions.

As per a report by David Han, a research analyst at Coinbase, the AI projects will encounter daunting competition and technical hurdles that can significantly affect its progress. He stated that crypto AI products tend to face an uphill battle against the broader market and regulatory forces.

AI Tokens Outperforming!

The total value of AI-based crypto projects has reached a massive $26 billion this year. About 30% of these gains were driven by another rise in Nvidia’s stock, whose shares saw an increase of 15% this week. Nvidia rose 8% to $728.35 from $674.72 in late February. Other AI-associated stock prices, AI-related tokens, and meme-coins increased following its rise.

Tokens like Akash and Render have gained 146% and 99% compared to Bitcoin’s 54%. However, the outlook for AI-based projects cannot be predicted. As of March 8, AI tokens have a market capitalization of $51.18 billion, as per data from Crypto.com.