A market correction has hit the AI-enabled crypto space, with gains cooling as attention grows.

After experiencing a fiery rally in the AI-powered crypto space over the past few months, investors appear to have adopted a profit-taking strategy over the past few days. The space surged to over $10 billion in mid-February, thanks to a significant climb by Bittensor, which saw its market capitalization grow by more than 220% to $4 billion. By March, the sector’s market capitalization had exploded to more than $25 billion.

Top AI currencies will soar in 2024 | Source: TradingView

Around March 9, several projects, including Bittensor, Fetch, OriginTrail, Worldcoin, and Arkham, reached new highs, pushing market capitalization to nearly $30 billion.

Over the past few days, the sector's market capitalization has fallen below $250 billion as investors took profits after a surge in a potentially overheated market. Although Bitcoin has also fallen, as of press time, its price is only 6% lower than its all-time high, while most of the top 10 AI encryption projects have fallen by more than 20%.

10 Head AI Currency

Interestingly, many AI cryptocurrencies have not been as closely related to Bitcoin as other coins in the market recently. Bittensor and Fetch in particular seem to be going their own way, only falling when Bitcoin makes major moves. Even then, these coins often have delayed reactions or move in the opposite direction to Bitcoin.

Since March 6, Fetch grew 140% in four days before retracing slightly by about 20%. Overall, since the sector peaked on March 9, Fetch is down 4%, ICP is down 11%, The Graph is down 12%, Singularity is down 13%, and Bittensor is down 12.8%.

Top AI currencies have fallen in the past few days | Source: TradingView

Although the rise of AI in 2023 will bring a large number of new AI-related meme coins and hype projects, the projects currently at the top of the rankings in the field are mainly focused on the practical application of decentralized AI tools. The work has attracted the attention of Ethereum’s Vitalik Buterin, Erik Voorhees, and other big names in the crypto space.

As AI development continues to accelerate, decentralized AI models may become as important as decentralized finance. Blockchain and tokenization appear to be solid partners for distributed AI networks, suggesting that the recent pullback may be profit-taking rather than investors losing confidence in the nascent space. However, given such rapid growth, investors may also be eager to see progress in technology delivery.

Many leading projects have live mainnets under active construction. The critical next step is to see whether network effects can attract users to come on-chain and interact with the fascinating intersection of AI and blockchain. Bittensor, for example, is certainly seeing demand for adoption, as the cost to register for one of its 32 subnets has risen from around $200,000 this month to over $5 million, with prices set by market forces rather than any centralized entity.