Original Author: Taiki Maeda, HFAresearch Founder
Original Translation: ShenChao TechFlow
At the market peak in the first quarter of 2024, the total circulating market value of the top 10 'AI technology coins' reached $30.9 billion. On the other hand, despite attracting more attention, the total market value of the top 10 AI Meme coins was only $2.54 billion.
I believe the emergence of $GOAT and @truth_terminal has opened up a whole new AI field that could potentially achieve a hundredfold growth in the future. This is a great opportunity to get ahead in a PvE (player versus environment) mode, just like the early days of the DeFi summer in 2020.
Market Opportunities
Meme Coin Supercycle + AI Supercycle = Ultimate AI Meme Coin Cycle
In the first quarter of 2024, as NVIDIA (NVDA) stock prices skyrocketed, many AI-related tokens also exhibited parabolic growth, despite certain issues with their fundamentals and token economics. We saw the total valuation of the top 10 'AI technology coins' surpassing $30 billion, not including fully diluted valuation (FDV) and smaller market cap tokens. I believe this is just a market test of price push in the crypto and AI fields, and in 2025, we will see a more significant parabolic growth.
However, I believe that most of the excess returns will occur in the AI Meme coin category. Currently, the total market value of AI Meme coins is only equivalent to that of Ethereum Classic. AI Meme coins will gradually attract capital through 'vampire attacks' from AI technology coins, static memes, and venture capital tokens.
'DeFi Summer' Moment
Many compare the phenomenon of $GOAT rising from $0 to $1 billion to the 'YFI moment' of this new field. A key catalyst during the DeFi summer of 2020 was the emergence of $YFI. It 'fairly launched' in July and reached a market cap of $1 billion within two months. This phenomenon activated a large influx of on-chain capital into the DeFi field because it validated the possibility of a fairly launched DeFi token starting from $0 and reaching a $1 billion market cap.
DeFi became a hot sector in the last cycle because it was novel, engaging, and filled people with imagination for the future. Against the backdrop of 0% interest rates, the narrative of DeFi was to attract capital from traditional finance (TradFi) through 'vampire attacks' and become the future financial system. This sparked a speculative frenzy on-chain, helping DeFi applications gain total value locked (TVL) and users, and tested the ecosystem in real-world conditions. When $YFI launched, the total market value of DeFi was about $5 billion, and at the market peak, it reached around $170 billion, growing 34 times. If we compare $GOAT to $YFI, then we are indeed in a very early stage now as the total market value of AI Meme coins is still below $5 billion.
The rise of the DeFi cycle relied on internal catalysts in the crypto space (such as liquidity mining, high-yield mining mechanisms, and speculative behaviors) and benefited from external circumstances (such as interest rates dropping to zero and capital flooding into the crypto space in search of returns). This process ultimately formed a bubble.
The ultimate cycle of AI Meme coins is similar to this. In the crypto space, the current mainstream narrative is the supercycle of Meme coins, while in the stock market, AI technology continues to provide growth momentum. The combination of these two creates ideal conditions for a bull market.
In the crypto space, areas that can inspire people's infinite imagination often present parabolic growth opportunities.
Reflexivity in the New Paradigm
The theory of reflexivity suggests that investor decisions are not based on reality, but on their perception of reality. This perception-driven behavior can, in turn, change reality (or fundamentals), further affecting investor perceptions and market prices.
In this context:
Price refers to the overall market value of the AI Meme coin sector.
Perception is the market's view of what these tokens represent.
Fundamentals are based on attention and the extent to which these tokens can spark dreams.
I believe these tokens are not 'pure Meme coins' but are closer to 'tokenized AGI (Tokenized AGI)'. They all launched fairly on the pumpfun platform. If these tokens were launched by venture capital (VC), they might be sold at a fully diluted valuation (FDV) of $1 billion with 10% circulation before being sold off to retail by VCs. But these AI Meme coins started from $0, providing an early participation opportunity for everyone. This phenomenon is similar to the ICOs (Initial Coin Offerings) we are replaying in real-time.
Here is how I think reflexivity plays a role:
The category of 'AI Meme coins' attracts speculators. Most people overlook it because 'it's just another PvP Meme coin narrative.' (We are currently at this stage)
Over time, the functionality of AI agents will gradually improve (e.g., Zerebro launching a record label, Truth Terminal releasing Infinite Backrooms v2, etc.), and investors' perceptions of these tokens will shift from 'just Meme coins' to 'a whole new field.'
This shift will attract more capital and attention from both inside and outside the crypto space, sparking more speculative activities. Some failed AI startups may pivot to issuing tokens as a last-ditch effort, and wealthy tech billionaires may also start investing in a handful of tokens.
Unlike 'static memes', these AI agents will execute activities on-chain, launch NFTs and DeFi projects, and even have real-world impacts. They are not static, but continuously evolving to attract more attention.
All of the above factors have collectively driven the potential valuation to rise infinitely, ultimately forming a bubble that ends with a boom-bust cycle.
These tokens all launched on the pumpfun platform, which is particularly important. This launch method aligns with current trend phenomena, including the formation of cult culture, the overlap of Meme coins and AI supercycles, and anti-venture capital sentiment. If you believe in the four-year cycle theory, then the arrival of AGI predicted by Elon Musk in 2025-26 may coincide with the peak of the crypto market in the fourth quarter of 2025.
My Investment Strategy
Honestly, I'm not sure how to allocate funds correctly. If this is just a 'meme' category, the current winners might continue to lead, so it's worth placing bets on them. On the other hand, if $GOAT performs like YFI, it might experience a significant surge—yet could ultimately be replaced by 'better technology'. Personally, I'm clear that I cannot accurately predict which tokens will ultimately prevail, so I choose to build a portfolio of AI Meme coins to profit in a 'rising tide lifts all boats' scenario as the overall market rises.
Here is a rough framework for allocating funds in this emerging field:
For tokenized AGI (Tokenized AGI), you are essentially betting on which AI agent can continuously attract and grow attention. Here, 'attention' is akin to 'revenue' in traditional markets, a core indicator of value.
Large language models (LLMs) will continuously improve over time, so you need to bet on the founders or developers who are motivated to create the best agents through fine-tuning models.
This field is in a long-term bull market. Watch for AI agents with potential to attract attention beyond crypto Twitter/X, as they can break through the small bubbles in the crypto space and gain wider recognition.
As the market develops, tokenomics will become increasingly important. You need to think about what the token's utility is? What does it represent? If the token price rises, will this help the AI agent further achieve its goals? The interaction between price, perception, and fundamentals (i.e., reflexivity) is crucial for every token.
In the last cycle, the total market value of DeFi reached $170 billion. If this sector can achieve a similar valuation, it would mean growth of about 40 times from the current level. However, given that the overall market value of the current crypto market is higher, it is entirely possible for us to surpass these levels. The key is to maintain firm belief, stay patient, and flexibly adjust investment strategies based on market fluctuations and rotations to maximize your 'sleep-friendly returns'—that is, achieving the best returns without affecting your sleep.
Please take my words seriously; I really don’t know what I’m doing. In fact, I believe no one truly knows what they’re doing. This situation can change at any time, but my current AI Meme coin portfolio includes:
$GOAT: The current leader, showing the strongest market performance.
#ZEREBRO: Led by native founders in the crypto space, deeply understanding cultural trends, and developing at a rapid pace.
#Fartcoin: Balancing the needs of 'left, middle, and right curves', aiming to satisfy different levels of investors. After all, everyone farts.
#Ai16z: While controversial, it maintains a developer community with 'cult' characteristics. If they can survive this period, they will become more antifragile.
$FOREST: An AI monkey project attempting to save the rainforest, with real-world impact.
