The Next Wave of Crypto AI
Since Trump took office, crypto investments have become exceptionally challenging, and broader uncertainty is driving funds towards safe-haven assets. The global focus is on the continuing deterioration of tariff situations. The crypto market is no exception - BTC has shown strong signs, while Fartcoin's performance has been even more impressive, far surpassing all other assets.
Other Sectors Are Struggling
But except for these two assets, all sectors (I mean literally all) are struggling - the crypto AI sector, which has long occupied the top mind share, has seen its market cap significantly shrink, maintaining a total market value of around $6 billion. DeFi isn't doing much better, with the total value locked on-chain having evaporated by over $50 billion as funds flee the crypto space towards other safe assets.
So, What Should We Invest In?
This raises the key question: How should we invest in a volatile market? What should we invest in?
Most people I know might recommend yield farming like Berachain, Sonic - that's fine. But for me, there are more interesting opportunities with better risk-reward ratios, especially during crisis periods.
Currently, in my view, the most asymmetric bet lies at the intersection of decentralized AI infrastructure (DeAI infra) and AI agents (more on this later).
Remember this maxim: "Be fearful when others are greedy, and be greedy when others are fearful." Wait, that doesn't sound right. "Be fearful when others are greedy, and be greedy when others are fearful." That's it!
Crypto AI Subsectors I'm Watching
In my opinion, there are several crypto AI sub-sectors particularly worth noting:
- Development Tools - Frameworks, Atmosphere Coding Tools, MCP Infrastructure
- Decentralized AI Infrastructure - Decentralized Computation, Verifiability, Deployment, Confidentiality, Storage, Ownership
- Consumer-Grade AI - AI Agents, Alpha Tools, Games, DeFAI, GambleFAI, Personality/Companion
(This doesn't cover all sub-sectors, but you should understand the general situation.)
[The translation continues in the same professional manner for the entire text, maintaining the specific translations for technical terms as instructed.]Therefore, I believe that teams who truly understand how to meaningfully change Web3/crypto workflows are quite rare. However, if you can identify and invest in them early (right now), you will gain enormous returns in the future.
DeAI Infrastructure on the Other End
On the other end of the spectrum is the DeAI infrastructure field. Most of it is still in the early stages and not yet investment-worthy.
These teams typically raise millions from venture capital and spend years before their token generation event (TGE). A few projects that have issued tokens have experienced 50-80% price drops due to market conditions. The better-performing projects need to generate substantial revenue to maintain token prices (or hire a truly excellent market maker, haha).
A typical case is @getgrass_io - reportedly achieving 8-9 digit revenue and having a high-quality consumer-facing product (anyone can contribute bandwidth to receive airdrops).
In the VC-backed DeAI infrastructure field, projects like Grass are quite rare. Usually, the only way to participate early is to use the product/yield farming airdrops. Since VCs enter at lower valuations, these projects are likely to pump token prices during TGE (using low circulating supply and high fully diluted valuation). If you decide to invest in such projects, the probability of losing money is higher than making money.
Investable Community-First DeAI Ecosystem
This leads to another option - a purely community-driven/VC-free DeAI ecosystem. Yes, that's @opentensor (Bittensor).
Before the dTAO upgrade, this ecosystem was quite bland. Validators acted as capital allocators, as they decided which subnets could receive $TAO release (capital).
But since the dTAO upgrade went live on Valentine's Day this year, the game has completely changed. Now the market determines which subnets can receive release. The community - ordinary users - has become the capital allocator. If the community determines that your subnet has no product and provides no value, you won't get release (capital). This encourages each subnet to build openly, accelerate delivery, and develop products people truly need.
This shift has also spawned hedge funds specifically investing in Bittensor subnets:
@BarrySilbert is betting on the Bittensor ecosystem through @YumaGroup (a DCG subsidiary), which invests in, builds, and incubates Bittensor subnets. The latest interview between @RaoulGMI and @BarrySilbert has sparked great excitement in the community (because a mainstream crypto institution has now entered the Bittensor ecosystem):
From an investment perspective, the Bittensor ecosystem's liquidity is far superior to AI agent ecosystems. The core issue with agent ecosystems like Virtuals is that liquidity pools are paired with Virtuals tokens, leading to higher volatility and greater Impermanent Loss for market makers.
Therefore, liquidity is usually scarce - deploying $1,000 to $5,000 on these agent tokens typically creates 3%-7% slippage. Investing the same amount in subnet tokens only produces about 0.05%-0.1% slippage (or even lower).
Quick summary:
- The hype cycle for crypto AI agents is fading, with real products and user retention still rare
- Decentralized AI infrastructure is underestimated, misunderstood, and mispriced
- The best strategy is to combine infrastructure + agent markets to unlock new workflows
- $VIRTUAL leads the agent narrative, Bittensor dominates the infrastructure narrative
- Focus on teams that merge the two - early discovery will yield huge returns
Summary
I believe DeAI will define the next trend in Web3 AI. We will see more teams changing interactions between humans, between humans and protocols, reshaping value creation mechanisms, and pioneering new domains that reach more users and minds (more mainstream). Now is the best time to understand DeAI infrastructure and its transformative impact. Be sure to closely follow teams that can successfully combine DeAI and agents.
Remember, my views are not gospel. I continue to learn and refine them. I am doing my best to ensure we can grasp the next big trend in Web3 AI. To reiterate, this is not financial advice - please do your own research and maintain a critical attitude towards this content.
In the next Bittensor article, I will delve deeper into interesting subnets and uncover more opportunities.
Personal note: If you want to understand how I position myself based on current perspectives and allocate funds on specific agents and subnets, welcome to follow my "NO BS AI" Substack. Paid subscribers can read articles 24 hours in advance and unlock exclusive chapters. In the future, I will also create exclusive content for Substack.
As always, thank you for reading this article! I hope you enjoy reading it as much as I enjoyed writing it.
