CAPITALIZING ON THE CONVERGENCE OF AI IN CRYPTO
Catalysts for Outperformance Before 2025
Markets look ready to enter the expansion zone, TOTAL3 looks like it could be bottoming but BTC.D still has not broken down yet. Two of the best performing sectors this year are RWA and AI. End user demand and revenue for AI protocols is low. However, there is opportunity in projects that are growing in these metrics that also have attractive valuations.
KEY TAKEAWAYS
2024: Market Flow and Positioning
- Markets are looking to enter the expansion zone of the global liquidity cycle, but returns are likely to be widely dispersed and asset allocation even more critical than ever. TOTAL3 looks like it could be bottoming, BTC.d showing no sign of stopping.
- The market has chopped since Q2 this year, and altcoin performance is highly dispersed. It appears we are at the lows of the liquidity index and this is bound to expand by the start of 2025.
Growth of the AI Sector
- Whilst enjoying high returns, the end user demand and revenue for AI protocols are low and extremely offside compared to valuations. Protocols with the best positioning are those who target institutional clients with high revenues while they are at attractive valuations compared to peers.
- There is a growing opportunity in the AI sector to invest in assets that have growing revenue and value accrual to the token compared to their valuations that are being underlooked by the market. These are likely to experience price discovery to new valuations once those metrics are understood.