Crypto – AI: When Investors’ Enthusiasm Precedes the Rall!

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Cryptos related to artificial intelligence (AI) have experienced a significant decline, as Google Trends data reveals a peak in interest from retail investors. This trend highlights a common phenomenon in markets: peaks in interest often coincide with market tops, reminiscent of Warren Buffett’s investment strategy of buying in panic and selling in euphoria.

According to recent information, major AI-associated cryptos such as FET, RNDR, TAO, and GRT have seen their market value drop by over 20% in seven days. This drop comes at a time when Google Trends indicates that interest in AI has reached a peak! With a score of 100, representing maximum popularity for the search query over the given period.

The CoinDesk 20 Index (CD20), which measures the broader crypto market, lost 6%. Meanwhile, the market leader, bitcoin (BTC), only dropped by 2.8% over the same period. This could indicate that AI-related cryptocurrencies are more volatile and reactive to changes in market interest and sentiment.

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Following trends to invest in crypto?

The Google Trends tool is widely used to gauge general or retail investor interest in trending topics. The value for the search query “AI” over the past 12 months peaked last week. This suggests that a growing number of current and potential crypto investors are seeking information on this topic.

However, it is crucial to note that peaks in interest are not always reliable indicators of future crypto market movements. For example, bitcoin, known to have a strong positive correlation with Nasdaq-listed chip maker Nvidia (NVDA), hit bottom with tech stocks at the end of 2022 after the launch of ChatGPT, which raised public awareness of AI.

Although interest in AI is at its peak, investors should remain vigilant and not get carried away by the excitement of the moment. Crypto markets are notoriously unpredictable, and history has shown that peaks in interest can often precede significant corrections.