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AI-Linked Crypto Tokens Drop as Google Searches Peak
Recent spikes in Google search queries for cryptocurrencies they have often signaled major market peaks, in line with Warren Buffett’s advice to buy in bad times and sell in boom times. This model now appears in the AI token market.
According to data from Coingecko, tokens such as FET, RNDR, TAO and GRT have seen their market value decrease by up to 30% in the last week. At the same time, Google Trends indicates that search interest in AI has likely peaked.
FET ranks as the fourth worst performer among the top 100 cryptocurrencies over the past seven days. In contrast, Bitcoin fell just 2.8% over the same period, while the broader CoinDesk 20 index fell 6%.
Google Trends, often used to gauge retail investor interest in trending topics, shows that the search query “AI” reached its highest value of 100 last week, the highest in the past five years. This score represents the maximum search volume for the query over a given time frame.
This increase in interest in AI suggests that public enthusiasm has reached a new high, attracting more retail investors into the market. Nvidia (NASDAQ:NVDA), a leading AI chip maker, has also seen increased attention alongside AI trends.
While indicative, Google Trends can be a valuable tool to keep an eye on, as retail investors often act on emotions and are usually the last to enter bull markets and the first to exit bear markets. For example, peaks in searches for Bitcoin and Solana coincided with their respective price peaks in May 2021 and November 2021.
It is important to note that Bitcoin, which has a strong positive correlation with Nvidia, bottomed out with tech stocks in late 2022 following the launch of ChatGPT, which increased general awareness about artificial intelligence. Jeremy Grantham, Chief Investment Strategist at GMO, noted that the AI rally could be a bubble within another bubble, potentially about to burst.
This insight can encourage investors to exercise caution when making investment decisions.
Featured image: Freepik