Bulls Cut Through Crypto AI FUD

Dear Subscriber,

On Monday, Marija Matić broke down the turbulence in tech stocks.

Its aftershocks sent AI cryptos down in sympathy.

Fortunately, the recovery was just as swift. Bitcoin (BTC, “A”) ended Monday's trading session roughly unchanged.

Over the past few days, I've received and read dozens of opinions on what this means for the future of AI and how it affects the outlook for high-tech chipmakers like Nvidia (NVDA).

And you know what? I think Marija is on the right track — this development is a sign the AI industry is maturing.

Going forward, we will likely see value driven by genuine technological advancement rather than speculation.

But I believe the bullish angle goes deeper.

Now, I've been an avid user of all sorts of AI models since ChatGPT 3's debut. And I have to say, I am fascinated by DeepSeek's reasoning capability.

That a bunch of hobbyists could produce such a thing with only a tiny fraction of the budget most U.S. tech giants claim is "necessary" … is utterly extraordinary.

What’s even more admirable and groundbreaking is this model is open source. Which means anyone can use it to build anything they want — including versions of it specifically tuned for particular tasks.

So yes, I believe DeepSeek will disrupt the industry. But not the way the market fears.

You see, there is a principle called Jevons' Paradox. Basically, it says the more efficient we get at using a resource, the more of that resource we actually consume.

We see this principle at work everywhere in technology and crypto.

Think of the internet back in the 1990s. It was slow as molasses. And as a result, it was barely practical for much beyond email, chats and maybe some image sharing.

But the faster internet connectivity became — as resource usage became more efficient — the more we demanded of it.

We’ve moved from email to streaming video. Then to Cloud Computing and on to the blockchain itself — which requires fast communication between all actors in the network.

Nowadays, practically everything runs on the internet. And the volume of physical resources required to run it … is astonishing.

Within crypto, Solana (SOL, “B”) is a good example of this principle. It was conceived and constructed to be a cheaper, faster alternative to Ethereum (ETH, “A-”).

And it succeeded remarkably! It offered transaction speeds that are orders of magnitude greater than what Ethereum — and all its Layer-2 networks — are capable of achieving.

And look at what happened to Solana usage as a consequence — it skyrocketed!

People who panic sold their techs and select cryptos earlier this week will probably continue to keep missing this simple fact:

As technology becomes more efficient and we get better at using it, new use cases pop up like mushrooms after a summer rain.

All of which were previously unfeasible because of the high costs involved.

It’s the same story with AI.

With slow, early-generation AI, we had ChatGPT and slow image generation.

But cheaper, faster AI could open the door to things like …

And plenty of other sci-fi-sounding advancements that you and I can barely imagine today.

That's what Chinese researchers gave the world a glimpse of this week. DeepSeek proved we're only scratching the surface of what will one day be achieved with this groundbreaking tech.

And while the notion of cheaper AI platforms has big AI firms running scared, it should have advanced chipmakers like Nvidia celebrating.

Nvidia already has a near-monopoly on the general processing unit (GPU) chips needed to run AI.

And with cheaper costs, the number of AI projects will increase. That’s when demand for their chips will go truly exponential.

What about AI crypto projects like Render (RENDER, “B-”) or Bittensor (TAO, Not Yet Rated)?

Remember, these are decentralized AI projects.

Render harnesses the unused GPU of potentially billions of devices around the world to power various and advanced AI applications.

And Bittensor is a marketplace where AI models can be shared and trained.

They have the potential to shine very brightly indeed in this new era of cheaper AI models.

In other words, the shake up in tech this week — when properly understood —amounts to little more than growing pains.

Longer term, it's compelling evidence of a tech revolution only just getting underway.

The future is bright.

To learn more about which crypto AI projects you should consider for your watchlist, I suggest you read my colleague Dr. Bruce Ng’s recent update, Not-So-Secret AI Agent Opportunities.

In it, he shows you how to use one nifty tool to narrow down potential crypto AI opportunities.

Best,

Juan Villaverde