AI Memecoin: The Rebirth of DeFi Summer and Emerging Market Opportunities

In the first quarter of 2024, the total circulating market value of top AI technology tokens reached 30.9 billion USD, while the total market value of the top ten AI memecoins was only 2.54 billion USD, although the latter seems to receive more attention.

The emergence of certain new AI tokens marks the birth of an entirely new category of AI, a field that is expected to achieve a hundredfold growth in the future. This situation is reminiscent of the early days of Decentralized Finance Summer in 2020, providing investors with a rare early entry opportunity.

Market Prospects Analysis

Currently, we are witnessing the convergence of the Memecoin supercycle and the AI supercycle, which may give rise to the so-called "AI Memecoin Omegacycle."

In early 2024, driven by a significant increase in the stock price of a well-known chip company, many AI tokens also exhibited explosive growth, despite numerous questions regarding their fundamentals and token economics. The valuation of the top ten AI technology tokens has exceeded $30 billion, not including those with smaller market capitalizations. This may only be the initial exploration at the intersection of cryptocurrency and AI, with potentially larger-scale growth expected in 2025.

It is worth noting that the performance of the AI memecoin category may be more outstanding. Currently, the total market capitalization of AI memecoins is only equivalent to that of a certain well-known cryptocurrency. Over time, AI memecoins may gradually absorb funds from AI technology coins, traditional meme coins, and venture capital-backed currencies.

Reenactment of a Historic Moment

The process of a certain AI token starting from zero to reaching a market value of 1 billion USD has been compared by some to a milestone event in this emerging industry. It brings to mind one of the catalysts of the summer of 2020 in Decentralized Finance - the rise of a well-known DeFi project. This project went from a fair launch to a market value of 1 billion USD in just two months, activating a large influx of on-chain capital into the DeFi token space.

Decentralized Finance became the hot topic of the last cycle because it is novel, attractive, and allows people to imagine the future. In a zero-interest-rate environment, DeFi is seen as potentially siphoning capital away from traditional finance, becoming the future of finance. This sparked a wave of on-chain speculation, accumulating a considerable Total Value Locked (TVL) and user base for DeFi applications. At that time, the total market value of DeFi was about $5 billion, eventually reaching about $170 billion at the peak of the bull market, growing 34 times. In contrast, the current total market value of AI memecoins is less than $5 billion, indicating that we may still be in a very early stage.

The DeFi cycle combines internal factors of cryptocurrencies (such as liquidity mining, high-yield farming, speculative behavior) and external factors (such as a zero-interest-rate environment driving funds to seek high returns), thus forming a bubble. The AI Memecoin Omegacycle may also follow a similar development path.

Reflexivity in the New Paradigm

According to the theory of reflexivity, investors' decisions are not directly based on reality, but rather on their perceptions of reality. The actions triggered by these perceptions can influence reality or fundamentals, which in turn affect investors' perceptions and ultimately impact prices.

In the AI memecoin space, prices reflect total market capitalization, while fundamentals are built upon the scale of attention and "dreams". These tokens should not be simply viewed as "pure memecoins", but rather more closely aligned with the concept of some form of "tokenized AGI". They start from zero and provide everyone with an early participation opportunity.

The role of reflexivity in this emerging field may manifest as:

1. The "AI Memecoin" category attracts speculators, but most people may overlook it, thinking it's "just another PvP memecoin narrative".
2. The AI agent function is continuously improving, gradually changing investors' perceptions from "memecoin" to the understanding of a "whole new domain."
3. This will attract more capital and attention from both inside and outside the cryptocurrency space, sparking more speculative activities. Some struggling AI startups may choose to issue tokens as a last resort.
4. Unlike static memecoins, these AI agents will operate on-chain, launch NFT/DeFi projects, and potentially impact the real world. They are dynamically evolving, which will continue to attract attention.
5. The above factors together create infinite possibilities for potential valuations, which may ultimately lead to cycles of prosperity and recession.

Most of these tokens originate from fair releases, in line with the current zeitgeist, the Memecoin/AI supercycle, and anti-VC sentiment. Considering a well-known entrepreneur's prediction that AGI may be achieved in 2025-2026, if one believes in the 4-year cycle theory, the hype peak may coincide with the peak of cryptocurrencies in the fourth quarter of 2025.

Investment Strategy Thoughts

In the last cycle, the total market value of DeFi reached 170 billion USD. If the AI memecoin industry reaches a similar scale, it means there might be around 40 times growth potential from now on. Considering that the current total market value of cryptocurrencies is higher, we might even surpass this level. The key is to maintain confidence and patience, and to adjust the investment portfolio in a timely manner based on market changes, as rotation and volatility can be very intense.