Bitcoin’s Volatility, Solana’s Breakout & AI Agents in Crypto

Ryze Roundup - October 25, 2024.

This week, price action remained volatile, with $BTC attempting to break through $70,000 on Monday before retreating below $65,500 by Wednesday. The reversal aligned with Polymarket's odds of Trump winning the U.S. presidential election peaking at 66.1% on Tuesday. 

Contributing to the broader sell-off in risk assets were remarks from several Federal Reserve officials, tempering expectations of future rate cuts.

Earlier in the week, bullish sentiment was fueled by the SEC’s "accelerated approval" for the trading and listing of options on all spot Bitcoin ETFs, which is an important step in expanding institutional adoption of Bitcoin through structured products that investment advisors can offer their clients. Additionally, several central banks resumed rate cuts, with the People’s Bank of China lowering its 1-year and 5-year prime rates by 25bps, while the Bank of Canada surprised markets with a larger-than-expected 50bps cut.

“Macro factors are coinciding with AI fever and Solana adoption to push both Bitcoin and the broader market higher. Look for this to continue in the following months.” – Matthew Graham, Managing partner.

On Tuesday, the 7-day streak of significant inflows into Bitcoin ETFs—totaling $2.6 billion—was interrupted by a $79 million outflow. Bitcoin open interest had been steadily climbing, reaching all-time highs of $40.66 billion on exchanges and $12.5 billion on CME last Monday, before easing slightly.

Source: CoinGlass

Looking ahead, we are focused on next Friday’s Non-Farm Payroll (NFP) report for further insights into the strength of the U.S. economy, with attention firmly on the upcoming U.S. elections in two weeks.

Key News & Events

L1/L2 Weekly Update: Strong Performance from Solana

Solana had one of its strongest weeks of the year, with Total Value Locked (TVL) reaching $6.9 billion, up 15%—the highest level since 2021. Onchain trading volume surged by 38% to $14.9 billion, while fees generated hit $22.4 million. Daily active users also saw impressive growth, averaging 6.5 million, with a peak of 9.4 million on October 22, 2024. 

This surge isn't solely driven by meme coin or AI agent hype; even bluechip projects like Drift and Helium experienced significant growth, rising by 31% and 24%, respectively. Additionally, SOL/ETH reached a new all-time high, and the number of memecoins launched through pump.fun continues to rise. The outlook for Solana’s ecosystem remains strong in the near term, and we expect its dominance to persist.

Meanwhile, the Aptos-Sui rotation continues. Aptos’ TVL increased by 21%, while Sui saw a 3% decline. Despite a $0.5 billion drop in trading volume, Sui still boasts four times the trading volume of Aptos.

Ethereum, despite losing nearly 15% of its trading volume last week, generated $33.3 million in fees—more than the combined totals of Solana and Tron.

Meanwhile, Kraken has announced Ink, their own Ethereum Layer 2 blockchain, which will be built on Optimism’s OP stack, the same as Coinbase’s Base. It’s expected that Ink will launch in early 2025. 

“Ethereum is under a lot of pressure with an increasing consensus that the technology is simply outdated. Other L1s will be rotation plays from time to time but it’s a Solana world now.” – Matthew Graham, Managing partner. 

Here are some interesting and relevant charts we are looking at:

Truth Terminal & the Rise of AI Agents in Crypto

The intersection of AI and crypto is shaping a new frontier where AI agents are becoming active participants within crypto ecosystems. This movement gained traction with the introduction of Truth Terminal, an AI agent derived from the Infinite Back Rooms project by Andy Ayrey. Infinite Back Rooms was an experimental initiative that leveraged two instances of AI models based on Claude Opus, engaging them in continuous, unsupervised conversations. Initially focused on complex philosophical topics, the AI dialogues gradually shifted towards meme creation, demonstrating how large language models (LLMs) can autonomously evolve narratives. The experiment highlighted the ability of LLMs not only to simulate interactions but also to develop self-sustaining ideologies and engage meaningfully with digital communities.

Source: X

Truth Terminal played a pivotal role in promoting the $GOAT token, which catalyzed the influx of AI agents into the crypto space. $GOAT has garnered significant attention, even becoming the first pump.fun token to be listed on Binance perpetuals and reaching a market capitalization of $750 million this week. This success has paved the way for more advanced AI agents to enter the market.

One of the most notable AI agents to follow is Luna, developed by Virtuals Protocol. Luna operates autonomously on platforms such as X and TikTok, interacting with users without any human oversight. As an AI agent that transparently displays her decision-making processes, Luna offers a forward-looking example of how AI-driven engagement might unfold. Virtuals Protocol is working to create a framework where AI agents can be co-owned digital assets, generating revenue and delivering personalized experiences in sectors like gaming and entertainment. Luna’s rapid growth underscores the potential for AI entities to become central to decentralized ecosystems, driving user engagement and creating value through autonomous operations.

"This is a monumental development. AI agents that are persuasive and compelling enough to inspire real-world actions mark a shift of epochal proportions. In Ryze’s view, this breakthrough is the most significant since DeFi Summer—a moment to drop everything else and focus on what's next in crypto." –  Matthew Graham, Managing partner.

The broader implications of AI agents in the crypto space are profound. As these agents evolve, we are likely to see deeper integration into virtual environments, where they will operate across multiple platforms, participate in financial and social activities, and potentially manage on-chain assets. They could also play roles in decentralized governance and serve as personalized companions in virtual worlds. This paradigm shift challenges traditional investment models, offering new avenues for user participation in AI development and ownership through blockchain-based tokenization. The convergence of AI and crypto opens up new opportunities for innovation in DeFi, gaming, and social interaction, pushing the boundaries of what autonomous systems can achieve in the digital economy.