The State of the Market

Total Crypto Market Cap: up 4.2% this week to $2.424T
Total AI Sector Market Cap: up 20.5% this week to $31.5B

The past week has been exceptionally strong for the crypto markets, largely accelerated by the US Federal Reserve’s surprising 50bps cut that exceeded the anticipated 25bps reduction.

Contrary to historical patterns where such aggressive easing might signal economic concerns, this move has actually bolstered market sentiment. The larger-than-expected cut seems to have lifted investor confidence, partially contributing to the positive momentum we're seeing.

Bitcoin has been closely tracking the global liquidity index, and this week was no exception. As global liquidity reaches new highs, BTC pushed past the $65K mark. This movement coincided with positive U.S. jobs data and indications of potential stimulus measures from China. It's worth noting that while Bitcoin often follows liquidity trends, it tends to do so with a slight lag.

As a result, according to CoinShares’ weekly Digital Asset Fund Flows report, there was approximately $321 million worth of inflows across all funds and digital assets products (BTC & ETH ETFs).

Nonetheless, the AI sector has been a standout performer, massively outperforming the total crypto market cap and pushing about $31B for the first time in months. Bittensor (TAO) is still showing strength, pushing into the top 30 by market cap. TAO was also named in the top 20 coins for Q4 in a reports released by Grayscale Research.

Given the nascent state of this sector and the fact that developing a valuation framework for DeAI projects is exceptionally difficult (especially depending on the sub-sector), we can see things getting pretty crazy if the markets really start to fire.