Look around. Each and every tech company has added an "AI assistant" to its applications. The note taking app you use has AI. AI is built into your email client. Even your toothbrush could soon be equipped with an AI chip, Heck.
It's time to start seeing the end of AI Fatigue.
The first retail 'FOMO' round is coming to a close. Investors are beginning to pose a very dangerous question: Where is the actual profit? The red flags are flashing regarding a classic macro bubble because billions of corporate dollars flow into AI, and there is little consumer return.
History is a repeating cycle—and in the world of finance, it always will be—so the AI hype cycle is now in for a big correction. Let's see how to identify the bubble, how to grasp the psychological turning point and where to get your crypto portfolio ahead of the music.
Phase 1: The Anatomy of the Hype Cycle
All financial bubbles, from the Dutch tulip craze in the 1600s to the Dot-Com bubble in the 2000s, have the same psychological trajectory:
The Displacement: A real groundbreaking new technology is revealed (ChatGPT, late 2022).
FOMO: Prices go through the roof. If "AI" is in the name of something, it suddenly has a multi-million dollar valuation. People with smaller capital, those called as Retail Investors, panic-buy because they fear that they could be missing an opportunity.
The Reality Check: Providing infrastructure is very costly, but getting average people to pay monthly subscription fees for chatbots is very challenging.
Currently moving from Phase 2 to Phase 3. The "Wow" factor is largely gone and AI is just background noise. If technology becomes invisible, then there is no speculative premium.
How the "Dot-Com" Crash Predicts the AI Correction
In order to appreciate what's going to happen next, we go back to year 2000.
Back then, companies used to register their name and their share prices would double within one day. As the bubble deflated, there was a lot of companies that had no fundamental value that simply disappeared. However, the internet itself didn't die. Amazon and eBay were the winners, and they are companies with real cash flow and infrastructure to survive and conquer the world.
The upcoming change for AI will be exactly the same. The hundreds of redundant crypto tokens, which boast to do "AI-driven decentralized marketing" or "AI blockchain analytics", will fall to zero.
The Tactical Playbook: How to Position Your Crypto
When a bubble in the form of a story corrects, the money spins quickly. Successful investors avoid being caught with a lot of worthless bags and search for asymmetric bets (assets that benefit from their use in the real world, not on a short-term trend).
Avoid buying “Wrapper” Tokens: If a crypto project is only able to claim it is based on a ChatGPT API backend to execute a very basic task, leave. They have no moat.
When seeking for Capital-Intensive Moats: Prioritize those that control or organize real-world physical resources (such as compute networks or raw storage protocols). It doesn't matter how much hype there is around a particular market, hardware is in constant demand.
Beware that the tech-heavy liquidity will look for alternative value rails after an AI stock market correction, as it will. The Bitcoin and other main layer-1 assets usually take this flight to safety.
The Bottom Line: Surviving the Shift
Don't be afraid of a correction, it's the best thing that can happen to a market. It eliminates the noise, it punishes the grifters and it leaves the actual innovators standing.
The AI gold rush has not ceased, but so has the good fortune of blindly purchasing the hype. The investors who do not go under over the next 12 months will be the ones who did not look for the wow, but took the time to examine the cold hard balance sheets.
Experiencing AI fatigue in daily life yet? Is the AI Hype taking over the crypto market now or can we expect another upswing? Discuss in comments below!
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