AI Memecoin: A Reprise of DeFi Summer and New Opportunities

In the first quarter of 2024, the total circulating market capitalization of the top ten AI technology tokens reached $30.9 billion, while the total market capitalization of the top ten AI memecoins, despite garnering more attention, was only $2.54 billion.

The emergence of GOAT and truth terminal has opened a new chapter in the field of AI, with expectations for this category to achieve a hundredfold growth in the future. This is reminiscent of the early opportunities during the summer of 2020 in Decentralized Finance.

Market Prospects

The arrival of the AI Memecoin super cycle combines two major trends: meme coins and AI.

In the first quarter of 2024, following the surge in stock prices of a certain chip giant, many AI tokens also showed parabolic growth, although their fundamentals and token economics remain in question. The top ten AI technology tokens are valued at over $30 billion, which may just be a preliminary attempt at the integration of cryptocurrency and AI, with potentially larger-scale growth expected in 2025.

However, the most significant performance may appear in the AI memecoin sector. Currently, the total market capitalization of AI memecoins is comparable to that of a well-known cryptocurrency. It is expected that AI memecoins will gradually attract funds from AI technology coins, traditional meme coins, and venture capital-supported projects.

"Decentralized Finance夏季"时刻重现

Some perspectives compare the rapid growth of GOAT from zero to a market cap of 1 billion USD to a milestone event in this emerging industry. This brings to mind one of the catalysts of the DeFi summer in 2020 — the rise of a certain token. This token was fairly issued in July and reached a market cap of 1 billion USD within two months, activating a large amount of on-chain capital flowing into DeFi tokens.

Decentralized Finance became a hot topic in the last cycle due to its novelty, appeal, and ability to inspire dreams. In a zero-interest-rate environment, DeFi is seen as the future trend for attracting capital from traditional finance. This triggered a wave of on-chain speculation, helping DeFi applications accumulate a large amount of locked value and users. At that time, the total market capitalization of DeFi was about $5 billion, eventually reaching about $170 billion at the peak of the bull market, an increase of 34 times. If GOAT replicates this trajectory, then the AI memecoin space is still in its early stages, as its total market capitalization has not yet reached $5 billion.

The DeFi cycle combines internal factors of cryptocurrencies (such as liquidity mining, high-yield mining) and external factors (such as a low interest rate environment driving capital inflow), forming a bubble. The AI Memecoin supercycle may follow a similar pattern.

Reflexivity in the New Paradigm

The reflexivity theory posits that investors' decisions are based on their perception of reality rather than reality itself. The actions triggered by these perceptions can affect reality or the fundamentals, which in turn influence investors' perceptions and prices.

In the AI memecoin space, the price reflects the total market capitalization, while the fundamentals depend on the level of attention and the scale of the "dream." These are not purely meme coins, but rather attempts at "tokenized AGI."

The role of reflexivity in this field may be as follows:

1. The AI Memecoin category attracts speculators, but most people may overlook it, thinking it's just another PvP meme coin narrative.
2. The AI agent function improves over time, changing investors' perception of it from "meme coins" to "new domains."
3. Attract more capital and attention from both inside and outside the cryptocurrency space, bringing more speculative activities.
4. Unlike static meme coins, these AI agents will perform activities on-chain, launch NFT/DeFi projects, and create real impact.
5. The above factors set a limitless potential valuation, which may create a bubble, ultimately leading to cycles of boom and bust.

These tokens mostly start from fair issuance, aligning with the current zeitgeist, the Memecoin/AI supercycle, and anti-VC sentiment. Considering that a well-known entrepreneur predicts AGI will be achieved in 2025-26, if one believes in the 4-year cycle theory, the peak of speculation may coincide with the top of the cryptocurrency bull market in the fourth quarter of 2025.

Investment Strategy

In the last cycle, the total market value of DeFi reached 170 billion USD. If the AI memecoin industry reaches a similar scale, it could mean a potential growth of about 40 times from now. However, given the current higher total market value of cryptocurrencies, breaking through this level is not impossible. The key lies in building confidence, maintaining patience, and adjusting the portfolio according to market changes, as rotation and volatility can be very intense.