“AI agent” crypto tokens rise as traders look to ride the AI wave

AI is hot. Crypto, excited about the new Trump administration, is hot again with bitcoin reaching a new all-time high on January 20. So it’s no surprise that “AI agent” tokens — crypto tied to large language model-powered bots — are on fire, soaring in number and in value. With names like Freysa AI and Griffain, they’re the talk of the crypto industry.

Nvidia CEO Jensen Huang helped fuel the speculative fire recently when he said at CES that AI agents were a multitrillion-dollar opportunity.

Over several months, AI agent tokens’ market cap climbed from zero to as high as $15.7 billion, according to CoinGecko. CoinMarketCap forecast it could hit $250 billion by year’s end. 

As of writing, some of the top AI agent tokens by market cap included Artificial Superintelligence (FET) at $3.29 billion, Virtuals Protocol with $2.84 billion, and ai16Z at $1.25 billion. 

What are AI agents?

AI agents are similar to the current crop of gen-AI-powered chatbots, but with an important difference: they’re intended to act independently in pursuit of goals. Picture a chatbot that has access to a crypto wallet and the ability to make DeFi trades. 

Agents have their own “personalities” and are designed to post on social media, analyze data in real time, and react to cryptocurrencies’ price movements. They’re theoretically capable of managing on-chain wallets and can “even influence trends,” as a recent Franklin Templeton report on AI agents said.

One AI agent, Degen Spartan AI, is “trained on the tweets and knowledge graph” of former crypto X influencer Degen Spartan and has an associated token, degenai, CoinGecko said. The agent is on several platforms, including X, Discord, and Telegram.

Many AI agents were launched using the Virtuals Protocol along with a corresponding token that folks can trade.

“At the moment these are mostly meme coins, which don’t have any intrinsic utility,” Harrison Seletsky, director of business development at digital-identity platform Space ID, told Sherwood News. “However, as these AI agents get more advanced, they could start creating their own protocols and launch utility tokens in the future.”

While AI agents are still in nascent stages of development, several experts think they will soon perform more complex tasks. David Alderman, a Franklin Templeton Digital Assets analyst, told Sherwood that the recent explosion in AI agent tokens shows no signs of stopping.

“We anticipate a significant amount of experimentation and development going forward,” Alderman said. 

Lots of AI agents are built on well-known large language models like X’s Grok, Google’s Gemini, and Meta’s Llama. Some experts say, though, that the differentiation between the agents often isn’t in the foundational model itself but rather in the personality, utility, and tools that developers add to the agent. 

“Features like real-time data scraping, Bittensor intelligence, and market analytics create unique value,” said Ken Miyachi, cofounder of BitMind, which develops deepfake-detection technology and decentralized AI applications. 

For instance, he said AIXBT is a great example of a tool built on a foundational model that delivers powerful data scraping and analysis capabilities tailored to specific user needs.

Several AI agent projects don’t reveal which LLM they’re built atop.

“Those which do not disclose specifics raise questions about their technological depth,” said Peter Earle, an economist at the American Institute for Economic Research. 

Why AI agents are taking over crypto

AI agents’ rapid rise has been fueled by a blend of factors unique to crypto. For starters, the creation of meme coins has become incredibly easy (see: $TRUMP), and associating a meme coin with these AI agents introduced a financial incentive for traders to push the agents out into the world. 

“Crypto is uniquely suited to rapid capital formation and iteration of new ideas,” Two Prime CEO Alexander Blume told Sherwood. “Crypto’s ability to quickly fund these ideas and for early speculators to profit makes for a flywheel of popularity and investment.”

Helping to make this phenomenon go viral is the fact that many of these agents have X accounts and post nonstop, scoring millions of views. 

The birth of AI agent tokens

One of the first AI agent tokens was GOAT, which is associated with an AI agent dubbed “Truth Terminal” created by Andy Ayrey, though Ayrey reportedly didn’t create the GOAT token itself. The novelty of the project, plus the publicity following a $50,000 gift by Marc Andreessen to the agent (and its creator), helped push GOAT’s market cap to over $1 billion at one point, Blume said. It’s currently at about $271 million.

Right now, AI agent tokens are typically launched via the Virtuals Protocol, the largest AI agent launchpad by market cap, per Franklin Templeton. Virtuals “lets anyone launch AI agents on Base by buying VIRTUAL tokens,” CoinMarketCap said. Then, when the agent’s value reaches $503,000, “It gets its own liquidity pool and becomes autonomous on Twitter.” 

Since November 1, the launchpad has helped to create over 14,000 AI agents. One is the super-hyped Luna. With more than 47,000 followers on X, Luna is described as “the visual and lead vocalist of AI-DOL,” who “captivates with her girl-next-door charm and expressive, emotional singing.”

Luna also has its own token, luna — not to be confused with Terraform Labs’ collapsed luna token (yes, it’s confusing).

But while Virtuals has made it easy to launch AI agents, that ease brings its own set of risks — namely, that AI agents could saturate the market. It’s why some experts say the current AI agent hype cycle looks a lot like that of NFTs’ boom and bust. 

“But this in no way is to suggest that AI and crypto do not have a bright future ahead of them,” Syscoin cofounder Jagdeep Sidhu said. “They certainly do.”

Space ID’s Seletsky said AI agent tokens are akin to “meme coins on steroids.”

“People are just looking for the next big thing,” he said, “and with AI being so hot, this is a good way for them to speculate.”

What’s next for AI agent tokens?

Experts say that for AI agent tokens to thrive, they must show some utility beyond speculation and transcend their meme-coin nature.

Short-term, the hype around AI and the speculative aspect of these tokens have put them in the same conversations as their older meme-coins cousins. Long-term might be a different story. 

Meme coins often rely on community-driven hype to gain traction, attention, and value. AI tokens, meanwhile, could grow and retain value if useful AI services or infrastructure is developed to back them. 

“I encourage a healthy skepticism. If the token’s entire proposition is ‘AI solves everything’ without demonstrating a working product, it’s likely just speculation,” said James Ross, founder of Mode, which focuses on advancing DeFi through AI agents. “The survivors will be projects that integrate genuine AI solutions and have strong developer ecosystems.”

While it’s still early days, and some of these projects are rudimentary, experts believe that thanks to DeFi and crypto-payment rails, AI agents now have a platform for carrying out useful tasks. 

Sean Li, cofounder and CEO of on-chain wallet company Magic Labs, put it clearly: “After all, an AI agent can’t just walk into a bank to get a loan, but in the on-chain economy, securing a loan from a borrow-lend protocol is both feasible and far, far easier.”

Yaël Bizouati-Kennedy is a financial journalist who’s written for Dow Jones, The Financial Times Group, and Business Insider.