Crypto Investment Activity Stays High On AI, Payments

• Funding activity in crypto is back to a high zone even though the Fear & Greed Index sits near 21/100.
• AI-linked crypto projects pulled in 32.91% of recent deals and AI tokens jumped 9.5% to about $27.3 billion in 24 hours.
• Payments ranked second at 25.88% of capital, helped by Ripple’s $500 million round tied to U.S. stablecoin and GENIUS Act momentum.

Crypto-focused venture firms are still deploying capital even as market sentiment sits in deep ‘fear’ territory. 

CoinMarketCap’s Fear & Greed Index dropped to a 30-day low near 21/100, a level traders usually read as “capitulation risk,” yet deal flow has stayed strong. This tells us smart money is buying future infrastructure while spot prices correct.

Related: Crypto Market Reclaims $227B In 38 Hours After $230 Million Leverage Flush

Crypto Investment Activity Focus

AI Leads With 32.91% Of New Crypto Investments

According to market data analysis from CryptoRank, the booming Artificial Intelligence sector has also trickled into the crypto industry. Furthermore, 32.91% of all investment activities in the crypto space involved projects focused on AI.

According to aggregate data analysis from CoinGecko, the AI market cap gained 9.5% during the past 24 hours to hover around $27.3 billion at press time. The AI framework sector was among the top gainers today led by DeAgentAI (AIA), which surged 588% during the past 24 hours.

However, many economists have cautioned investors against a potential AI bubble. Moreover, several surveys have revealed a declining AI adoption and revenues compared to the early stages.

“It is a bubble. The question is, when will the bubble pop? The valuations just don’t make sense in terms of the income that these companies are making, and the enormous amounts of infrastructure that they require. It’s just not economically sensible,” Gary Marcus, the former head of Uber AI Labs, noted.

Payments Hold Second Place On The Back Of Ripple’s $500M Raise

The crypto payment sector is the second-highest in investment activities, constituting around 25.88% of all capital invested in the recent past. For instance, Ripple Labs, a cross-border blockchain payment company, announced a $500 million investment from Fortress, Citadel, Pantera, Galaxy, Brevan Howard, and Marshall Wace.

The payment sector has gained significant mainstream traction fueled by clear regulatory frameworks in the United States. With the GENIUS Act getting implemented, more traditional financial institutions are focused on updating their payment systems through blockchain and stablecoins.

Why VCs Are Bullish When Prices Are Not

The Infrastructure Cycle Thesis

As the crypto market gets mainstream adoption, certain sectors are bound to gain more traction. Similar to the internet boom, which favored some companies over others, a similar trend is emerging in the crypto space amid the mainstream adoption of digital assets.

Venture capitals have information asymmetry advantages: including access to crypto founders, early patents, academic research papers, and policy drafts. As such, venture capitals are likely to focus on areas likely to win in the near future led by AI and payments

Investment Goals

The high investment activities in the crypto space amid notable fear of capitulation are largely attributable to the fundamental goals. While crypto traders speculate on the underlying tokens and coins, venture capital firms are focused on owning the underlying infrastructure.

As such, venture capital firms have more stable returns on investments through fee collection.

Related: Paradigm Urges Treasury To Keep GENIUS Act Stablecoin Rules In Line With Statute