An analysis of the cryptocurrency market sector reveals that AI, DeFi, and memecoin sectors have surpassed Layer 1 and Layer 2 solutions in performance over the past month.
Fetch.AI [FET] and BitTensor [TAO] have emerged as frontrunners in this growth, showcasing significant progress since August. As market sentiment remains uncertain, traders are seeking established narratives to guide their investments.
While new narratives may surface in the future, it is evident that AI and memecoins stand out as attractive investments in times of market stability.
Examining the Performance of FET & TAO
Given the strong performance of AI coins, let’s delve into the price action of FET and TAO pairs.
The impressive quarterly earnings of Nvidia in August have instilled confidence in AI coins, indicating a positive trajectory for these assets.
For Fetch.AI, the FET/USDT pair has shown signs of a potential uptrend. Breaking out of an inverted head and shoulders pattern typically signifies a bullish reversal.
Moreover, the Chaikin Money Flow (CMF) is on the rise, reflecting increased buying pressure in the market. If this trend continues, FET may reach $2.21 by the end of the year or early next year.
Similarly, BitTensor presents an optimistic outlook. Although TAO faced resistance at the $440 level, it is showing a bullish trend as prices move to fill the gap left by a significant wick.
The CMF for TAO is close to turning positive, indicating a flow of capital into this AI asset. Additionally, the relative strength index (RSI) is currently in the overbought zone.
While an overbought RSI may signal a market correction, it often indicates robust bullish momentum, particularly for TAO.
Analysis of Futures Funding Rates
Another positive sign is the recent shift in futures Funding Rates for Fetch.AI, transitioning from negative to positive territory.
This change suggests a growing number of traders taking long positions, which typically leads to higher prices for FET and other AI coins.
Increasing Funding Rates imply that long traders are compensating short traders to maintain their positions, reflecting rising demand for FET and its counterparts.
Nevertheless, this situation raises the risk of liquidation for long positions in case of a market downturn.
Comparing Coins
Between FET and TAO, FET appears to be the more attractive investment option. FET has outperformed TAO with a 71% gain over the past month compared to TAO’s 28%.
Moreover, FET boasts a higher market capitalization of $3.79 billion, surpassing TAO’s $2.46 billion. This results in a volume-to-market cap ratio of 11.65% for FET and 6.54% for TAO.
The higher volume-to-market cap ratio of FET indicates a potentially more stable investment choice, especially in terms of price volatility.
The AI sector, spearheaded by FET and TAO, shows promising prospects for price appreciation.
With favorable market conditions and encouraging price trends, both traders and investors should monitor these coins as they navigate the evolving cryptocurrency landscape.
As AI coins gain momentum, opportunities may abound for those interested in participating in this dynamic market.