AI agents: From 100x returns to market correction – What’s next?

• AI agents delivered 100x-1000x returns, but market correction followed the hype.
• The next phase of these agents will focus on real-world applications in DeFi and memecoin trading.

In late 2023, AI agents captured the crypto world’s imagination, delivering mind-blowing returns for early investors.

Tokens like Virtuals Protocol [VIRTUAL] and aixbt [AIXBT] saw gains of 100x and 1000x, respectively, driving a frenzy of speculation and media buzz.

However, as is often the case in the volatile crypto space, the hype eventually gave way to a market correction.

Now, the big question remains: is the AI agent narrative over, or is this just the beginning of a new, more sustainable phase?

As the dust settles, the next evolution of AI agents is already unfolding, and the potential for innovation and growth is far from over.

The rise of AI agents

The AI agent narrative took the crypto market by storm in late 2023, delivering astronomical returns across multiple projects.

Source: X

The peak came around late December, when AI agent coins collectively crossed $5 billion in market cap, with top tokens experiencing exponential growth.

However, as seen in the chart, the momentum cooled off sharply in January 2024, leading to a decline back to $2 billion-$3 billion range.

While some projects continue to show resilience, the overall market structure suggests a crucial inflection point — will AI agents fade to dust, or is another rally imminent?

The problem of roundtripping

Crypto narratives evolve in cycles, allowing traders to catch multiple waves of speculation before they fade.

The AI agent boom followed this pattern — early investors reaped huge rewards, but those who didn’t exit at the peak faced painful roundtrips back to their entry points.

The market’s inability to sustain these gains isn’t a sign of failure, but rather the natural ebb and flow of hype-driven capital.

Many traders held onto their AI agent bags, believing the growth would continue indefinitely, only to watch their profits evaporate.

This psychological trap of roundtripping is common in crypto, and history suggests that only the strongest narratives make a lasting comeback.

How far can these agents go?

The first wave of AI agent projects largely revolved around automation and speculative hype, promising innovative use cases but lacking real-world application.

However, we are now transitioning into Stage 3 AI agents, where intelligence layers and model training are taking center stage.

This evolution marks a shift from generic automation tools to specialized, self-improving agents capable of handling complex crypto tasks.

Many early projects have faded due to limited development progress, but a few teams remain committed to pushing the boundaries of AI in crypto.

The next wave of AI agents will focus on practical applications — whether it’s automating yield farming, optimizing DeFi strategies, or enhancing trading algorithms.

These advancements will determine which AI projects survive the speculative purge and lead the next cycle of growth.

The way ahead

The future of AI agents depends on delivering real profits, particularly in DeFi yield farming and memecoin trading. In bull markets, the volume of opportunities and token launches outpaces retail traders.

AI agents designed specifically for DeFi farming could revolutionize the space by identifying the best yield strategies in real time.

Realistic or not, here’s VIRTUAL’s market cap in BTC’s terms

Similarly, memecoin trading remains a high-risk, high-reward game, where early entry determines success. Agents trained for meme token analysis, launch tracking, and sniper trading could give users a serious edge.

Success in this new AI wave will hinge on win rate, ROI, and profit/loss performance. Projects excelling in these are likely to spearhead the next surge.