Prominent traders in the cryptocurrency sector have garnered extraordinary profits from the burgeoning trend of Artificial Intelligence (AI)-related tokens. Despite the financial success stories, the rapid popularity rise has drawn significant criticism from industry experts, who argue that these tokens are potentially even more problematic than previous memecoin trends.
In January, on-chain data analysis firm Lookonchain reported a significant profit made by a savvy Solana trader, who deftly navigated the burgeoning AI token market.
This investor transformed a $2 million stake in AI agent and memecoin ai16z (AI16Z) into an impressive $21 million within merely two months, capitalizing on the surge in AI-related tokens. The AI-managed crypto fund operates within the Solana blockchain, governed by ai16zDAO, derived from the venture capital firm Andreessen Horowitz, also recognized as a16z.
The trader strategically purchased 10.6 million ai16z tokens, valued at $2.27 million, between mid and late November 2024, at an average cost of $0.214 per token. Since the acquisition, the token's price has spiked by 965%, now trading at approximately $2.28. By the time of the report, the trader’s holdings were estimated at $21 million, marking $19 million in unrealized gains. Earlier today, the trader transferred 5.3 million ai16z tokens, worth $10.68 million, to Jupiter for eventual sale via a limit order.
In a parallel success, another trader turned a $123,000 investment into $4.5 million by investing in ai16z when the token's market capitalization was a modest $22 million. This trader initially acquired 6.17 million ai16z tokens and subsequently sold 4.67 million for roughly $1.78 million. Currently, the trader retains 2.65 million ai16z tokens, with a valuation of $2.9 million, cumulating profits exceeding $4.5 million in a short span. Additional lucrative ventures into other AI crypto assets, including GOAT, FARTCOIN, and ARC, resulted in an additional profit of $13.4 million.
The soaring interest in AI agent tokens during late 2024 saw them become favorites among crypto investors, with experts predicting their narrative dominance alongside memecoins.
However, as AI memecoins surged to prominence, capturing top spots among memecoins in late December, skepticism mounted. Ai16z, the leading AI memecoin by market capitalization, soared by 251% recently, reaching a record high of $2.47 on January 2. The token stands as the third-largest AI agent crypto, experiencing a 25% rise over 24 hours, fluctuating between $2.25 to $2.28 during Monday's trading hours.
Nevertheless, the sector has faced intense scrutiny from the crypto community. On-chain analyst ZachXBT has critically labeled AI agent tokens as deceptive. Addressing an industry peer, Justin Taylor, ZachXBT asserted that "99% of it is a scam" and claimed that "AI agent wrapper grifts are arguably worse than past trends."
Zach emphasized that while memecoins make no promises, "AI coins try to larp as much as possible to appear legit to unsuspecting buyers."
Such sentiments echo those of Solana founders, who also deem AI agent tokens to be excessively hyped. An anonymous survey among 42 Solana founders indicated a broad consensus that AI Agents and Blinks are deemed the "most overrated sector within Solana.”
Despite facing heavy criticisms, the sector continues to exhibit growth, with a 5% increase recorded in the past day. According to CoinGecko data, the daily trading volume stands impressively at $2.28 billion, supporting a robust market capitalization of $17.5 billion.