Author: Taiki Maeda, HFAresearch Founder
Compiled by: Deep Tide TechFlow
At the market peak in the first quarter of 2024, the circulating market cap of the top 10 'AI tech coins' reached $30.9 billion. On the other hand, despite attracting more attention, the total market cap 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 seize the lead in a PvE (player versus environment) mode, just like the early days of the summer of DeFi in 2020.
Market opportunities
Meme coin super cycle + AI super cycle = Ultimate cycle of AI Meme coins
In the first quarter of 2024, as NVIDIA (NVDA) stock prices skyrocketed, many AI-related tokens also showed parabolic growth, despite having some issues with their fundamentals and tokenomics. We saw the total valuation of the top 10 'AI tech coins' break through $30 billion, not including fully diluted valuation (FDV) and smaller market cap tokens. I believe this is just a market tentative price push between crypto and AI, and in 2025, we will see larger-scale parabolic growth.
However, I believe that most of the excess returns will appear in the AI Meme coin category. Currently, the total market value of AI Meme coins is only equivalent to Ethereum Classic. AI Meme coins will gradually attract capital through 'bloodsucking attacks' from AI tech coins, static Memes, and venture tokens.
'DeFi Summer' moment
Many compare the phenomenon of $GOAT rising from $0 to $1 billion to the 'YFI moment' of this new field. An important catalyst for the summer of DeFi in 2020 was the emergence of $YFI. It had a 'fair launch' in July and reached a market cap of $1 billion within 2 months. This phenomenon activated a large influx of on-chain capital into the DeFi space, as it validated the possibility that a fairly launched DeFi token could start from $0 and reach a market cap of $1 billion.
DeFi became a hot field in the last cycle because it was novel, engaging, and filled people with imagination about the future. In a context of 0% interest rates, the narrative of DeFi was to attract capital from traditional finance (TradFi) through 'bloodsucking attacks' and become the future financial system. This triggered a speculation frenzy on-chain, helping DeFi applications gain total locked value (TVL) and users, and put the ecosystem through real-world testing. When $YFI launched, the total market value of DeFi was about $5 billion, and at the market peak, this figure reached about $170 billion, growing 34 times. If we compare $GOAT to $YFI, we are indeed in a very early stage now, as the total market value of AI Meme coins is less than $5 billion.
The rise of the DeFi cycle relied on both internal catalysts in the crypto space (such as liquidity mining, high-return mining mechanisms, and speculative behavior) and external environments (such as interest rates dropping to zero and capital flooding into crypto seeking returns). This process ultimately formed a bubble.
The ultimate cycle of AI Meme coins is similar. In the crypto space, the current mainstream narrative is the super cycle of Meme coins, while in the stock market, AI technology provides sustained growth momentum. The combination of these two creates ideal conditions for a bull market.
In the crypto space, those fields that can inspire limitless imagination often present parabolic growth opportunities.
Reflexivity in the new paradigm
The theory of reflexivity posits that investors' decisions are not based on reality, but rather on their perceptions of reality. This perception-driven behavior can, in turn, change reality (or fundamentals), further influencing investors' perceptions and market prices.
In this context:
Price refers to the overall market value of the AI Meme coin space.
Perception is the market's view of the significance that these tokens represent.
Fundamentals are based on attention and the dreams that these tokens can inspire.
I believe these tokens are not 'purely Meme coins', but are closer to 'Tokenized AGI'. They all had a fair launch 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, only to be sold off by VCs to retail investors. But these AI Meme coins start from $0, providing everyone with an early participation opportunity. This phenomenon is similar to the ICOs (Initial Coin Offerings) that we are replaying in real-time.
Here’s how I think reflexivity plays a role:
'AI Meme coin' category 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 entities gradually improves (e.g., Zerebro launching a record company, Truth Terminal releasing Infinite Backrooms v2, etc.), and investors' views on these tokens shift from 'just Meme coins' to 'a whole new field.'
This shift will attract more capital and attention both inside and outside the crypto space, stimulating more speculative activity. Some failed AI startups may pivot to issuing tokens as a last-ditch effort, while wealthy tech billionaires may also begin investing in a few tokens.
Unlike 'static Memes', these AI entities will perform activities on-chain, launch NFT and DeFi projects, and even create real-world impacts. They are not static but continuously evolving, attracting more attention.
All these factors together drive the potential valuation to rise infinitely, ultimately forming a bubble and ending in a boom-bust cycle.
All these tokens launched on the pumpfun platform, which is particularly important. This launch method aligns with current trend patterns, including the formation of worship culture, the overlap of Meme coins and AI supercycles, and anti-VC 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
To be honest, I’m not sure how to allocate funds correctly. If this is just a 'meme' category, the current winners may continue to lead, making it worthwhile to bet on them. On the other hand, if $GOAT performs similarly to YFI, it may experience a significant surge — but ultimately could be replaced by 'better technology.' Personally, I'm clear that I cannot accurately predict which tokens will ultimately prevail, so I choose to build an investment portfolio of AI Meme coins to profit in a 'rising tide lifts all boats' scenario as the overall market rises.
Here’s a rough framework for how I allocate funds in this emerging field:
For Tokenized AGI, you are essentially betting on which AI entity can continuously attract and grow attention. Here, 'attention' is similar to 'revenue' in traditional markets and is a core metric for measuring value.
Large language models (LLM) will continuously improve over time, so you need to bet on founders or developers motivated to create the best agents through fine-tuning models.
This field is in a long-term bull market. Pay attention to those AI entities that have the potential to attract attention beyond crypto Twitter/X, as they can break through the small bubble in the crypto space and gain broader recognition.
As the market develops, tokenomics will become increasingly important. You need to think about what the token is used for? What does it represent? If the token price rises, does this help the AI entity further achieve its goals? The interaction of price, perception, and fundamentals (i.e., reflexivity) is crucial for each token.
In the last cycle, the total market value of DeFi reached $170 billion. If this field can achieve a similar valuation, it would mean approximately 40 times growth from the current level. However, due to the higher overall market value of the current crypto market, it is entirely possible for us to surpass these levels. The key is to have faith, be 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 don't think anyone truly knows what they're doing. This situation could change at any moment, but currently, my AI Meme coin portfolio includes:
$GOAT: The current leader, showing the strongest market performance.
#ZEREBRO: Led by native founders of the crypto space, deeply aware of cultural trends, and developing at a rapid pace.
#Fartcoin: Balancing the needs of the 'left, center, and right curves' aims to satisfy investors at different levels. After all, everyone farts.
#Ai16z: Despite ongoing controversies, it has maintained a developer community with 'cult-like' qualities. 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.
