ASC AI Index - the market’s leading index of AI tokens
April 2024 Results
ASC AI Index (AAI) tracks the price performance of the top tokens in the AI sector, using a rules-based criteria designed to reflect the landscape of AI tokens. The index includes the top 30 tokens that meet the minimum criteria of market capitalization, daily trading volume, and quality of exchange venues. AAI serves as a performance tracker for the crypto AI sector and will also be developed into an investable basket product in the future for investors seeking AI-sector specific exposure within the cryptocurrency industry.
April 2024 Results
AI tokens experienced a major correction in April, leading AAI to lose 30.6% amid a broader decline in the crypto markets and risk assets in general. The losses were distributed rather evenly across the AI sector, with the top 5 weighted assets (RNDR, FET, TAO, THETA, and AGIX) all losing between 25% and 35%. All 30 index constituents were down for the month, with the sole exception of Theta Fuel (TFUEL), the gas token of Theta blockchain, which managed a 0.4% monthly gain.
As late as April 2nd financial markets had been pricing in 3 Fed rate cuts in 2024, but by mid-month hot inflation data had driven expectations to 1 rate cut, if any at all. Risk assets predictably dropped across the board, with US equities down 4% and BTC down 14.8%. AAI, a higher-beta index given its altcoin makeup (the YTD beta of AAI versus BTC is 1.25), naturally took even larger losses. NVDA, perhaps the most pure-play equity for AI factor exposure, was down 4% in April, highlighting that AI tokens exhibit both higher return potential but also higher volatility.
The index value decreased from 258.64 to 179.44 at month-end. While April was clearly its worst performing month in 2024, AAI still remains by far the best performer YTD in the comp set, owing to its massive outperformance in February and March.
In the April end of month rebalance, the index saw the addition of two new constituents: NodeAI (GPU) and Commune AI (COMAI). NodeAI is one of the many crypto projects rushing to create a decentralized network to provide GPU for AI use cases, claiming 80%+ cost savings versus accessing GPUs via AWS. Commune AI is a peer-to-peer protocol and marketplace for AI modules and primitives. They will debut with weights of 0.6% (GPU) and 0.4% (COMAI) in the index. As the AAI is capped at 30 constituents, the two lowest market cap tokens (ARC, SDAO) drop out of the index for May. The new weights of the index are as follows:
Three of the top 10 market cap tokens on the index, FET, AGIX, and OCEAN, have approved a proposal to merge their respective tokens into one new token ASI (Artificial Superintelligence). FET will be known as ASI going forward, while AGIX and OCEAN will convert to ASI at fixed exchange rates. If this merger is completed in May as projected, the ASI token that emerges would easily be the largest index constituent by a wide margin. For more information, see the ASC Research brief on ASI.
Index Construction and Rebalancing Methodology
ASC use the following criteria for the index’s token selection process:
Market Capitalization - AAI requires a minimum token market capitalization of $20 million for inclusion in the index, based on a token’s average market cap over the prior 30 days. This ensures that the index captures the most important and representative tokens of the sector, while excluding tokens with such low market caps that they can be easily manipulated.
Presence on Tier 1 or Tier 2 Exchanges - The index only includes tokens that are trading on at least one Tier 1 or Tier 2 exchange, since less reputable exchanges often engage in wash-trading in order to boost the apparent volume. This ensures the index is only tracking tokens with legitimate price discovery that reflects actual trading in the sector. For the purpose of this index, Tier 1 or Tier 2 exchanges are defined as centralized exchanges Coinbase, Binance, Kraken, OKX, ByBit, Kucoin, and Gate.io, as well as DEXes Uniswap, Jupiter, Orca, PancakeSwap, Trader Joe, and Raydium. The list of exchanges will be reevaluated quarterly given the fast-changing nature of the crypto exchange landscape, particularly on the DEX side.
Trading Volume - The threshold for inclusion in the index is an average daily trading volume of at least $500k over the prior 30 days, with a majority of volume coming from Tier 1 or Tier 2 exchanges.
Project Focus - The protocol or platform should have a majority of its transaction volume or other usage in AI-related use cases, or in the absence of a live product or measurable usage metrics, the core focus and mission of the project must be related to AI.
The index value was set at 100 at the time of its launch on January 1, 2024. The index is rebalanced monthly based on the initial selection criteria of market cap, trade volume, and exchange listings. There are no caps or floors to asset weights, as the index is intended to reflect the sector makeup accurately even when it is dominated by a small number of tokens. If more than 30 tokens meet all of the index criteria for a given month’s rebalance, then only the top 30 tokens by market capitalization will be included.
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This is for informational use only. This is not investment advice. Other than disclosures relating to Alpha Transform Holdings (ATH) and Alpha Sigma Capital (ASC) this information is based on current public information that we consider reliable, but we do not represent it as accurate or complete, and it should not be relied on as such. The information, opinions, estimates, and forecasts contained herein are as of the date hereof and are subject to change without prior notification. We seek to update our information as appropriate.
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