AI-Related Cryptocurrencies Surge as Bitcoin Lags in Latest Crypto Rally

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Artificial intelligence (AI)-related cryptocurrencies took the spotlight as the crypto market experienced a surge, with altcoins outperforming Bitcoin (BTC). Native tokens from layer-1 blockchain Near (NEAR) and decentralized computing platform Render (RNDR) led the rally, rising between 18%-20% over the past 24 hours. These tokens topped the CoinDesk 20 Index, which gained 1.5% during the same period.

Other AI-related tokens saw significant gains as well. Bittensor (TAO), a decentralized machine learning protocol, climbed 17%, while Livepeer (LPT), a decentralized video streaming network, saw continued upward momentum after Barry Silbert, CEO of Digital Currency Group (DCG), called it an “under the radar crypto AI play.” Livepeer is also part of the Grayscale Decentralized AI Fund, managed by DCG’s asset management arm.

Bitcoin and Ethereum’s Performance

While altcoins rallied, Bitcoin struggled with a less than 1% gain, hovering around its 200-day moving average just below $64,000. In contrast, Ethereum’s Ether (ETH) showed relative strength with a 3.5% return, further boosting confidence in layer-1 protocols.

Another notable outperformer was Celestia’s native token (TIA), which rose 12% following news that the Celestia Foundation had raised $100 million in funding, led by Bain Capital Crypto, to support its blockchain data availability project.

Macro Trends and Impact on Crypto

The broader market was also influenced by traditional financial markets, where gold hit new record prices, and stocks continued to rise following the Federal Reserve’s recent 50 basis point rate cut. Chicago Fed President Austan Goolsbee hinted at more rate cuts in the coming year, signaling a long-term plan to bring rates closer to 3%.

Lower interest rates, typically bearish for Bitcoin, may have a different effect this time, according to Markus Thielen, founder of 10x Research. With inflation cooling toward 2%, Thielen believes Bitcoin could see bullish momentum, breaking out to new all-time highs in the last quarter of the year, driven by several catalysts.

Catalysts for Bitcoin’s Potential Breakout

Thielen highlighted several factors that could fuel Bitcoin’s rally:

• Historical performance: October through March has traditionally been Bitcoin’s strongest period, contributing the majority of the asset’s yearly gains.
• FTX estate: The potential redistribution of $16 billion from the FTX estate to creditors may see a portion of those funds flowing back into crypto assets.
• Institutional liquidity: The SEC’s approval of options for BlackRock’s spot Bitcoin ETF (IBIT) paves the way for new financial instruments and institutional capital inflow into Bitcoin.

Despite concerns around the 2024 U.S. presidential election, Thielen downplayed its impact, noting that rising government spending and deficits would likely continue, providing a favorable backdrop for Bitcoin.

As AI-related tokens lead the charge in the latest crypto rally, Bitcoin remains under pressure, though some experts foresee a breakout by year’s end. With macroeconomic trends like rate cuts, institutional interest, and potential inflows from the FTX estate, the crypto market, particularly altcoins and AI-focused projects, could be poised for continued growth as Bitcoin seeks to regain momentum.