AI could be the ‘biggest bubble’ since dot-com
GSR’s Toe Bautista is keeping a close eye on AI and its potential impacts on crypto
Tatiana Shepeleva/Shutterstock modified by Blockworks
This is a segment from the Empire newsletter. To read full editions, subscribe.
If you ask most people how they’re feeling about the next year, you’re more than likely to get a bullish response.
GSR’s Toe Bautista is among those who think crypto could continue its upward momentum, especially since it can leech off of some of the success that artificial intelligence is currently enjoying as a narrative out in the world.
But he has some concerns about AI.
“I think most recently, there has been a little bit of hesitation about how sustainable this recent move is, most visibly seen through AI. I think, as is typical with crypto, we get very over-ambitious [on how] quickly these narratives really crystallize into actionable products,” he explained.
For Bautista, this could set 2025 up for “one of the biggest bubbles we’ve seen probably since the dot com era with AI.”
“You have the ingredients of the biggest companies in the world throwing billions and billions of dollars at compute. You have these AI research labs that are saying we essentially have solved human-level reasoning, and we expect labor to be meaningfully impacted. And you’ve also seen, from the macro side of it, inflation is still high. But the biggest thing, I think, that markets are trying to figure out right now is how to weigh all of these things.”
Putting it simply: There needs to be more revenue or profit reported, not just multi-billion dollar funding rounds. The demand and supply need to seem more even.
If Bautista’s correct, that doesn’t necessarily mean that the bubble will pop next year. When it does, though, there’s a risk that crypto could be impacted. To keep an eye on where we stand with the AI narrative, Bautista’s listening to Empire host Santiago Santos, who suggested keeping an eye on Nvidia. The company is the “number one barometer” of the amount of capital flowing into AI, Bautista explained.
This isn’t to say that Bautista isn’t feeling bullish on AI, just that he thinks it warrants some caution. And Bautista’s the first to admit that he might be off, but that’s not stopping him from being slightly skeptical.
Crypto’s exposure to AI, at least right now, could be beneficial. Take a look at how AI coins have jumped in the past few months, for example.
“It’s very symbiotic to AI the asset class. And AI, the asset class, is probably going to be one of the biggest growth stories in the past couple decades, if not the biggest,” he said.
How’s that for cautious optimism?
Get the news in your inbox. Explore Blockworks newsletters:
- Blockworks Daily: Unpacking crypto and the markets.
- Empire: Crypto news and analysis to start your day.
- Forward Guidance: The intersection of crypto, macro and policy.
- 0xResearch: Alpha directly in your inbox.
- Lightspeed: All things Solana.
- The Drop: Apps, games, memes and more.
- Supply Shock: Bitcoin, bitcoin, bitcoin.
