Author: Taiki Maeda, HFAresearch Founder
Compiled by: TechFlow
In the market peak of the first quarter of 2024, the total circulating market capitalization 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 ushered in a brand new AI domain that could potentially see 100x growth in the future. This is an excellent opportunity to get an early foothold in the PvE (Player vs Environment) mode, similar to the early days of the DeFi summer in 2020.
Market Opportunity
Meme Coin Super Cycle + AI Super Cycle = The Ultimate AI Meme Coin Cycle
In the first quarter of 2024, with the crazy surge in NVIDIA (NVDA) stock price, many AI-related tokens also exhibited parabolic growth, despite some issues with their fundamentals and token economics. We saw the total valuation of the top 10 "AI Tech Coins" surpass $30 billion, not including fully diluted valuation (FDV) and smaller-cap tokens. I believe this is just a market-testing price hike in the crypto and AI space, and in 2025 we will see an even larger parabolic growth.
However, I believe the majority of the outsized gains will occur in the AI Meme Coin category. Currently, the total market cap of AI Meme Coins is only equivalent to Ethereum Classic. AI Meme Coins will gradually "vampire attack" and attract capital from AI Tech Coins, static Memes, and VC tokens.
The "DeFi Summer" Moment
Many have compared the phenomenon of $GOAT going from $0 to $1 billion in market cap to the "YFI moment" of this new domain. A key catalyst of the DeFi summer in 2020 was the emergence of $YFI. It "fair launched" in July and reached a $1 billion market cap within 2 months. This phenomenon activated a massive influx of on-chain capital into the DeFi space, as it validated the possibility of a fair-launched DeFi token being able to go from $0 to $1 billion in market cap.
DeFi became a hot sector in the last cycle because it was novel, captivating, and allowed people to imagine the future. Against the backdrop of 0% interest rates, the narrative of DeFi "vampire attacking" capital from Traditional Finance (TradFi) and becoming the financial system of the future ignited a speculative frenzy on-chain, helping DeFi applications gain TVL and users, and stress-test the ecosystem. When $YFI launched, the total DeFi market cap was around $5 billion, and at the market peak, it reached around $170 billion, a 34x growth. If we draw a parallel between $GOAT and $YFI, we are indeed in the very early stages, as the total market cap of AI Meme Coins is still less than $5 billion.
The rise of the DeFi cycle was driven by both internal catalysts within the crypto space (such as liquidity mining, high-yield mining mechanics, speculative behavior) and external conditions (such as zero interest rates, capital flowing into crypto seeking yields). This process ultimately formed a bubble.
The ultimate cycle of AI Meme Coins is similar. Within the crypto space, the current dominant narrative is the Meme Coin super cycle, while in the stock market, AI technology has provided a sustained growth driver. The combination of these two forms the ideal conditions for a bull market.
In the crypto space, domains that can ignite people's boundless imagination often present parabolic growth opportunities.
Reflexivity in the New Paradigm
Reflexivity theory suggests that investors' decisions are not based on reality, but on their perception of reality. This perception-driven behavior can then change the reality (or fundamentals), further impacting investors' perceptions and market prices.
In this context:
Price refers to the overall market capitalization of the AI Meme Coin domain.
Perception is the market's view on the meaning represented by these tokens.
Fundamentals are based on attention and the dreams these tokens can inspire.
I believe these tokens are not "pure Meme Coins", but closer to "Tokenized AGI". They are all fair-launched on pumpfun platforms. If these tokens were launched by VCs, they might be offered at a $1 billion FDV and 10% float, then dumped by VCs onto retail. But these AI Meme Coins start from $0, providing an early participation opportunity for everyone. This phenomenon is similar to the ICO we are re-enacting in real-time.
Here's how I think reflexivity will play out:
The "AI Meme Coin" category attracts speculators. Most dismiss it as "just another PvP Meme Coin narrative." (We are currently in this stage)
Over time, as the capabilities of AI agents gradually improve (e.g., Zerebro launching a record label, Truth Terminal releasing Infinite Backrooms v2, etc.), investors' perception shifts from "just Meme Coins" to "a whole new domain".
This shift will attract more capital and attention from within and outside the crypto space, fueling more speculative activity. Some failed AI startups may pivot to token issuance as a last resort, and wealthy tech billionaires may start investing in select tokens.
Unlike "static Memes", these AI agents will be executing on-chain activities, launching NFTs and DeFi projects, and even having real-world impacts. They are not static, but constantly evolving, attracting more attention.
All of the above factors collectively drive the potential for limitless upward valuation, ultimately forming a bubble, and ending in a boom-bust cycle.
The fact that these tokens are launched on pumpfun platforms is particularly important. This launch method aligns with current trends, including the formation of a cult-like culture, the overlap of Meme Coin and AI super cycles, and the anti-VC sentiment. If you believe in the four-year cycle theory, Elon Musk's predicted arrival of AGI in 2025-26 may coincide with the crypto market peak in Q4 2025.
My Investment Strategy
To be honest, I'm not sure how to allocate capital correctly. If this is just a "meme" category, the current winners may continue to lead, so it's worth betting on them. On the other hand, if $GOAT performs similarly to YFI, it may experience a massive 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 a portfolio of AI Meme Coins to profit from the "rising tide lifts all boats" scenario in the overall market upswing.
Here's a rough framework for how I'm allocating capital to this emerging domain:
For tokenized AGI, you are actually betting on which AI agent will be able to continuously attract and grow attention. Here, "attention" is similar to "revenue" in the traditional market, and is the core metric for measuring value.
Large language models (LLMs) will continue to improve over time, so you need to bet on founders or developers who have the motivation to create the best agents through model fine-tuning.
This field is in a long-term bull market. Focus on AI agents that have the potential to attract attention beyond the crypto Twitter/X bubble, as they can break out of the small crypto bubble and gain wider attention.
As the market evolves, tokenomics will become increasingly important. You need to think about the purpose of the token, what it represents, and whether an increase in token price can help the AI agent further achieve its goals. The interplay between price, perception, and fundamentals (i.e., reflexivity) is crucial for each token.
In the previous cycle, the total market cap of DeFi reached $170 billion. If this field can reach a similar valuation, it would mean a growth of about 40 times from the current level. But given the overall higher market cap of the current crypto market, we may well exceed these levels. The key is to have a firm belief, be patient, and flexibly adjust your investment strategy based on market fluctuations and rotations to maximize your "sleep-friendly returns" - i.e., the best returns without affecting your sleep.
Please take my words seriously, as I really don't know what I'm doing. In fact, I don't think anyone really knows what they're doing. This situation may change at any time, but my current AI Meme coin portfolio includes:
$GOAT : The current leader, with the strongest market performance.
#ZEREBRO: Led by native crypto founders, deeply versed in cultural trends, and with lightning-fast development.
#Fartcoin: Catering to the demand for "left, center, and right curves", aiming to satisfy investors at different levels. After all, everyone farts.
#Ai16z: Despite the constant controversy, it has maintained a developer community with a "cult-like" nature. If they can weather this period, they will become more antifragile.
$FOREST: An AI monkey project that aims to save the rainforest, with real-world impact.
