Look for This Leading Sector’s Big Co meback

Dear Subscriber,

The AI agents have struggled over the past three weeks.

Not surprising considering the bombshell launch of DeepSeek on Jan. 20.

DeepSeek is a Chinese AI powerhouse that accomplished with $6 million what others have spent billions to achieve. Its emergence challenges long-held assumptions about the costs of AI development.

And that realization is still rocking the market.

AI agents have seen their aggregate market cap drop from $17 billion before DeepSeek … to roughly $6.6 billion today:

In fact, some of the worst performing alts were AI agents these past few weeks.

My colleague Marija Matic made the case why DeepSeek’s revelation is actually long-term bullish for the AI industry. That’s definitely worth a read.

But when it comes to AI agents in particular, two key factors come into play.

Reason 1: AI Agents Mirror the DeFi 2020-2021 Boom

Each crypto bull market sees different sectors take the lead and outperform.

In this cycle, the top narratives for the most part have been memecoins and AI.

But at the height of the previous bull market in 2020-2021, crypto headlines were dominated by the DeFi boom.

That doesn’t mean every leading narrative will see the same outcome cycle to cycle. But there are a lot of similarities between DeFi then and AI agents now.

Just take a look at the growth comparison of their respective market caps below.

The blue above marks the DeFi boom from April 2020 to April 2021. The green shows how much AI agents have grown from April 2024 through today.

And while you can see that its aggregate market cap is retracing — to hover at $6.6 billion at the time of writing — this broad picture fills in some important context.

First, you can see the latest retracement of green is a minor blip in the grand scheme of things.

Second, you can see how similarly AI agents are behaving in this market compared to DeFi in the last.

And that makes sense considering both AI agents and DeFi …

The market may be on pause for now. But we have every reason to believe it will kick into high gear once again.

If AI agents, as a leading narrative, continue to trace DeFi’s performance from the last cycle, we could see massive gains for its top-performing projects.

Reason 2: AI Infrastructure is Becoming Cheaper

The Deepseek-R1 launch shook up both the traditional and crypto AI market for two key reasons:

Of course, the figures above were derived from evaluating a limited number of cases, according to a deep dive by Venture Beat.

But these cases were varied enough. And they consisted of notable questions, including logical inference … high level mathematics … arithmetic … investment analysis … and more.

In addition, DeepSeek is open source. That means anyone can copy its code and look into it for privacy and security issues.

That’s great for security. And it means we can expect more Large Language Models like it in the future.

Already researchers have jumped to do the same with OpenAI’s o1 model and trained it to reason for under $50.

So DeepSeek has instigated two revolutions:

The implications are astounding.

AI agents are going to have lower operational costs and new agents will pop up with greater frequency.

That will lead to greater creativity and innovation in this space. And in the marketplace of ideas, the best ones will rise to the top.

And I anticipate a fair share of these agents will be built on the blockchain. After all, AI agent startups can find funding for cheaper through the crypto route.

Some Caveats

At the time of writing, there are 1,416 AI agent projects tracked on cookie.fun.

(Learn how to use this helpful tool to find the hottest AI agents here!)

A lower barrier to entry for AI agents means that number could explode. And an oversaturated market means each one will likely see their value diluted.

This will mean selecting the best AI agents will be key if you want to make the most of this narrative’s vast potential.

And it will mean targeting the right time to enter to avoid the current volatility.

To that end, I encourage you to join my colleague Juan Villaverde one week from now at his emergency summit, The Great 245X Crypto Anomaly.

In it, he’ll reveal a “glitch” in the crypto market that could open the door to a powerful new Super Bull Market. And he’ll show you a powerful “multiplier” strategy that can help you maximize your potential gains.

It’s free to attend. Just save your seat now, then check your inbox for all the details you’ll need to join.

Best,

Dr. Bruce Ng