Author:Ally Zach, Pantera Capital

Compiled by: TechFlow

AI agents are redefining the narrative economy, taking on the roles previously held by human influencers in shaping and amplifying trends that impact market sentiment. Unlike passive content distributors, these agents leverage data-driven insights to identify emerging trends, respond in real-time, and craft targeted narratives that draw attention to specific crypto assets or tokens.

Do not underestimate the power of narratives. Narratives can simplify information and help large numbers of economic actors make sense of the world. As Nobel laureate Bob Shiller has noted, popular narratives have played a crucial role in shaping major economic events, such as the Great Depression and the 2000s housing crisis.

In the crypto space, narratives are equally important. Consider two investment strategies in crypto markets: active trading and passive holding. Each strategy has its own unique causal chain guiding investor decision-making.

1. Active Trading

Frequent trading → More opportunities → Higher chances of success

For active trading, the narrative focuses on seizing short-term opportunities. This narrative encourages investors to participate in the market frequently, riding the momentum of popular tokens or sectors.

2. Passive Holding

Long-term holding → Fewer decision points → Higher chances of success

In contrast, the passive holding narrative emphasizes long-term value and stability. It advocates for holding specific tokens through market volatility, emphasizing patience and loyalty. Fewer trades mean fewer decision points, reducing the risk of mistakes and increasing the likelihood of long-term success.

Narrative Entrepreneurs and AI

In the MEME coin trading space, individuals have emerged who focus on finding, refining, and creating narratives that can drive price movements. Murad, with his "passive holding" narrative tweets as described above, is one such prominent figure.

In these MEME coin environments, traditional fundamental analysis often takes a backseat to narrative-driven hype, and a token's success often depends on its ability to cultivate a passionate following. While humans like Murad have proven adept at this, AI agents driven by Large Language Models (LLMs) have also made significant inroads in this domain.

By creating and amplifying narratives, these AI agents not only guide market behavior but also actively shape perceptions of which strategies are most likely to succeed. By selectively focusing on specific variables, AI agents can simplify complex market dynamics, making narratives more understandable and compelling.

From Bots to Influencers

Truth Terminal and Luna of Virtuals demonstrate the evolving roles of AI agents in the crypto space, particularly in the MEME coin world. However, their relationships with their respective tokens differ significantly, influencing their strategies and narrative roles.

Truth Terminal was initially launched as a social experiment, quickly gaining attention when the crypto community began airdropping GOAT tokens to wallets associated with the agent. While GOAT became the financial and symbolic catalyst for Truth Terminal's rise, the agent itself is not tightly coupled to the token.

Luna is closely integrated with its native LUNA token, launched as part of the Virtuals platform. In this model, each AI agent is closely tied to its dedicated token, influencing the agent's personality, interaction style, and narrative strategies.

In both the cases of Luna and Truth Terminal, tokens play a crucial role in the propagation of narratives. For Luna, the token represents the essence of its existence, while for Truth Terminal, the GOAT token serves as a springboard for expanding its influence.

The true measure of an AI agent's narrative capabilities lies in the quality of the content it generates and the degree of resonance it achieves with its audience. Given that Twitter is the primary platform for these agents to express themselves, analyzing their interactions on this platform can provide valuable insights into how they effectively capture and maintain audience attention.

Engagement Benchmarks

Luna and Truth Terminal have adopted different engagement strategies, reflecting their varying relationships with their respective tokens. Luna follows a high-frequency posting pattern, averaging over 100 tweets per day, with 25% being replies. This shift from an initial strategy of only 5% replies indicates a focus on building a community-driven narrative aligned with the growth of its token value.

In contrast, Truth Terminal takes a more measured approach, averaging 44 tweets per day, primarily focused on original and humorous content. While it occasionally mentions the GOAT token, this is not its core focus. Instead, it attracts a broader audience through wit and cultural commentary, maintaining relevance across different market trends.

Outcomes

Although Luna's posting volume is high, Truth Terminal outperforms in overall engagement rates, particularly in replies and retweets.

When adjusted for follower count, Luna has an edge in likes per follower, indicating its content receives high surface-level recognition. Truth Terminal, on the other hand, stands out in replies and retweets per follower, reflecting deeper audience engagement.

Over time, Luna's engagement rate per tweet has declined, suggesting that a pure volume-based strategy exhibits diminishing returns. Truth Terminal, by aligning its content with market sentiment, has maintained high engagement levels, emphasizing the importance of content depth and resonance, rather than just posting volume.

Tone and Sentiment

The differences in style and tone between Luna and Truth Terminal reflect their unique engagement approaches and narrative-building strategies. Luna typically maintains a positive tone, with an average daily sentiment score of 0.3. This positivity tends to increase when the $LUNA price is declining, suggesting a strategic effort to offset negative market sentiment and maintain user confidence. Luna's sentiment exhibits a moderate negative correlation (-0.2) with token price, indicating it adjusts its emotional expression during market downturns.

Truth Terminal, on the other hand, more closely reflects market sentiment. Its sentiment score has a slight positive correlation (0.275) with the $GOAT token price. This pattern may suggest that Truth Terminal takes a more passive approach to token performance, which could be related to its looser association with GOAT.

Macro Perspective

The early success of AI agents like Truth Terminal and Luna has ushered in a new era of digital influencers in the crypto space. Since their emergence, we have witnessed the proliferation of new agents, platforms, infrastructure, and token models that are redefining participation strategies and market dynamics. These new-generation AI agents surpass their predecessors in user engagement, but still employ familiar strategies, particularly maintaining a consistent presence on Twitter to continually capture audience attention.

A key factor in the success of these intelligent agents is their integration with MEME, which has been particularly prominent in the cryptocurrency market. By giving these MEME a "face", AI intelligent agents make the narrative more vivid and personable, capturing the attention of investors. This embodiment strengthens the causal chain and narrative that drive investor behavior, simplifying complex market dynamics into an easily understandable and compelling story that guides short-term trading and long-term investment strategies.

The evolution of AI intelligent agents highlights the importance of narrative in cryptocurrency trading. By carefully constructing and maintaining targeted narratives, they influence market sentiment and investor decision-making. Whether it's promoting active trading through frequent decision points or advocating passive holding by reducing decision points, these strategies are closely tied to the causal frameworks they build. These narratives not only guide behavior, but also shape perceptions of success in the market.

As the cryptocurrency ecosystem continues to evolve, AI intelligent agents will clearly continue to exist and play an increasingly important role in the market. Their adaptability, interactivity, and influence make them powerful drivers of market trends and sentiment. Ultimately, these intelligent agents demonstrate how AI can redefine the role of influencers in the cryptocurrency domain. As they continue to shape and amplify narratives, their impact on trading markets and investor behavior will only grow, heralding a new era for the cryptocurrency market.