OpenAI's Funding Milestone Triggers Unexpected Downturn for AI Cryptos TAO and FET

2024-10-16, 07:09

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## [TL; DR] 
OpenAI raised $6.6 million in a funding round where leading venture capital firms participated.

During the first week of October TAO and FET showed signs of increasing bearish momentum.

When  investing in AI crypto investors should adopt the diversification strategy.

## Introduction 
OpenAI has helped to bring the concept of generative artificial intelligence to the attention of many people, institutions and governments. That conscientization started in 2022 when it launched ChatGPT, a generative artificial intelligence chatbot. Other popular artificial intelligence powered chatbots are Gemini, Chatsonic, Claude and jasper. Today, we focus on OpenAI’s recent fundraising campaign aimed at sourcing capital to improve and expand its AI services.

## OpenAI Secures $6.6 Billion Amid High Expectations for AI Coins
Recently, OpenAI concluded a fundraising initiative where it raised $6.6 billion. The purpose of the fund is to boost its performance, scale up its infrastructure and develop solutions to the challenges which it is currently facing. Its valuation has increased from $29 billion to $80 billion, reflecting its dominant position in the AI sector. That also shows its interest in maintaining its leadership position and expanding its research capacity.

Commenting in its 2 October blog post [OpenAI said](https://openai.com/index/scale-the-benefits-of-ai/ "OpenAI said"), “The new funding will allow us to double down on our leadership in frontier AI research, increase compute capacity, and continue building tools that help people solve hard problems.” The growth in the OpenAI ecosystem was a result of ChatGPT. At this point, ChatGPT has an average of 250 million active users. However, these include 11 million subscribers. In terms of revenue generation OpenAI is expected to have sales worth around $3.7 billion in 2024 and $11.6 billion in 2025.

Some of the established firms that took part in the OpenAI funding include Chipmaker Nvidia, Japanese group SoftBank, Thrive Capital and MGX. After its successful fundraising initiative its valuation puts it at par with the American multinational transportation company, Uber. However, its market capitalization is still far less than that of Microsoft, which is one of its backers.

Read also: [The Rise of Chinese AI Unicorns and a Battle with OpenAI](https://www.gate.io/blog/4139/the-rise-of-chinese-ai-unicorns-and-a-battle-with-openai "The Rise of Chinese AI Unicorns and a Battle with OpenAI")

## Market Performance of Leading AI Cryptocurrencies: TAO and FET Face Significant Downturns
[Bittensor (TAO)](https://www.gate.io/how-to-buy/bittensor-tao "Bittensor (TAO)") and [Artificial Superintelligence Alliance (FET)](https://www.gate.io/how-to-buy/fetch-ai-fet "Artificial Superintelligence Alliance (FET)") prices were affected by the sell-news related to OpenAI funding round. Thus, after the completion of the round TAO AI crypto and FET faced a downturn. About three days after the funding round TAO’s price dropped by 8.5% as it was trading below $500. Later in the week TAO’s rebound effort failed as the sellers showed more aggressiveness than the buyers. By 3 October technical indications showed that the token price might fall below $490.30 targeting $465.70. According to [TAO price analysis](https://www.gate.io/price-prediction/bittensor-tao "TAO price analysis") its price may rise if there is a notable reduction in its selling pressure. If the selling momentum decreases and more investors buy AI crypto its price may increase to around $617.90.

Read also: [How do AI large models and Web3 coexist?](https://www.gate.io/learn/articles/how-do-ai-large-models-and-web3-coexist-all-creation-camp-ai-crypto-studio/1675 "How do AI large models and Web3 coexist?")

Based on the <a  rel="nofollow noopener noreferrer"  href="/price/fetch-ai-fet" target="_blank" class="blog_inner_link">FET price</a> analysis the AI crypto encountered the same fate as TAO. By 3 October there were strong signs that it was depressed and there was no sign of a bullish reversal. Its price that stood at $1.40 on that day was below the 20-day [Exponential Moving Average](https://www.gate.io/learn/articles/what-is-the-exponential-moving-average/423 "Exponential Moving Average") (EMA which showed great bearish pressure. Generally, if the price is above the 20 EMA it shows that it has bullish momentum. Many technical indications showed a strong possibility of a sustained downtrend. Failure to rebound on time would force its price to fall below $1.22. Based on the existing market prediction, its rebound and an increase in bullish momentum would push its price towards $1.74.

## The Sell-the-News Effect on AI Crypto 
The concept of “buy the rumor”, sell the news’ is very popular in the <a  rel="nofollow noopener noreferrer"  href="/price" target="_blank" class="blog_inner_link">cryptocurrency market</a>. This strategy is centered around the fact that certain events influence the prices of investment assets to rise or fall. Therefore, unconfirmed rumors may have a strong effect on the price direction of digital assets such as artificial intelligence coins. Therefore, most traders buy AI crypto assets when there are rumors of positive developments in the sector or an improvement in the economic outlook. As an example, some investors purchased FET and TAO following the news of a possible OpenAI funding round. However, when the purported event occurred the price may stabilize or reverse.

In reality, a simple tweet from a renowned investor may influence the price of a coin to rise or fall. News about a launch of a new AI project, improvement in the blockchain technology,  interest rate cuts, a global crisis or regulatory changes may force traders to sell or <a  rel="nofollow noopener noreferrer"  href="/crypto/buy" target="_blank" class="blog_inner_link">buy crypto</a> assets. Positive news such as the endorsement of a cryptocurrency by a celebrity may influence its price to rise. Negative news like pending legal action against a crypto project may trigger a bearish momentum.

## Looking Ahead: FET's Decline: A Closer Look at Market Trends and Predictions
Despite TAO’s recent bearish market it is showing signs of recovery. The rise of TAO is connected to the Grayscale Decentralized AI Fund. More importantly, the boost came weeks ago when Grayscale increased its allocation of the fund by 27.6% by 4 October. Interestingly, TAO has a share of 30.2% of the fund. As a result of this, TAO’s trading volume rose by 286% between 7 September and 7 October. At the same time, its market capitalization increased from $1.7 billion to $4.7 billion. Considering these developments TAO may surpass its all-time high of $757.60, during this quarter.

Read also: [An Overview of the Grayscale Ethereum Trust (ETHE)](https://www.gate.io/learn/articles/an-overview-of-the-grayscale-ethereum-trust-ethe/4331 "An Overview of the Grayscale Ethereum Trust (ETHE)")

Apart from TAO the <a  rel="nofollow noopener noreferrer"  href="/price" target="_blank" class="blog_inner_link">crypto market</a> expects the price of FET to rise as well during this quarter, recovering from its current levels. Already it is showing signs of market recovery. For example, on 11 October FET bounced off the $1.26 support level and retested the $1.40 resistance mark. However, if it surpasses this level it may face further resistance at the $1.85 price level. Significantly, if it overcomes this hurdle its value may rise towards $3.08. That similar scenario occurred in March. Nonetheless, to reach this level its price should rise by 115%. On the other hand, if it fails to break above the $1.85 level its price may fall towards $1.26.

## Investment Strategies for AI Crypto Enthusiasts
In order to get returns from investing in AI cryptocurrencies investors should utilize proven crypto investment strategies. Let’s briefly look at the strategies most suitable for crypto assets.

Diversification: A savvy crypto investor should allocate his/her funds across various assets that may [include TAO](https://www.gate.io/blog/4578/tao-surges-driving-new-narrative-in-ai-sector "include TAO"), FET, <a  rel="nofollow noopener noreferrer"  href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> and ETH. Since AI cryptocurrencies promise good returns an individual should buy AI crypto assets that cater for different sectors.

Use Technical Analysis: No matter what, it is important that every crypto investor uses technical analysis when selecting cryptocurrencies to invest in. For example, investors should analyze graphs, volumes and other metrics like MVRV to forecast the future price movements of different digital currencies.

Fundamental Analysis: It is not enough to analyze the technical aspects of an asset. One should also assesses its fundamentals such as token distribution and total supply. There is also a need to know the use-cases of the coin and the team behind it.

Sentiment analysis: The fact that the crypto sector is affected by public opinions shows the need to understand the prevailing <a  rel="nofollow noopener noreferrer"  href="/price" target="_blank" class="blog_inner_link">crypto market</a> sentiment. For example, [if you buy AI crypto](https://www.gate.io/price/view/artificial-intelligence "if you buy AI crypto") when the community has a negative sentiment towards it its future may be bleak.

Other Important Aspects: In addition to the above strategies the investors should use proper risk management tools. They should also track the current news which may affect the prices of digital currencies.

## Conclusion
OpenAI managed to raise $6.6 million it aims to use to enhance its research capability. Also, it aims to improve its infrastructure in order to offer reliable service to the market. In related crypto news, the TAO and FET prices may rebound during the remainder of the year. This is because  the positive developments that are taking place in the artificial intelligence sector are driving the values of AI cryptocurrencies like TAO and FET.

<div class="blog-details-info">
<div>Author:**Mashell C.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.All investments carry inherent risks; prudent decision-making is essential.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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