In partnership with

TheBRRR’s Thoughts 

Editor’s note: the podcast is back! We generate a full conversation between two AIs covering the day’s most interesting stories. Subscribe on Spotify and Apple to get notifications when a new episode drops.

FOMC should be a nothingburger today - Powell won’t say anything to rock the boat before the holidays and we’re all but assured another ¼ point rate cut.

Last year he famously made his dovish pivot in the last meeting of the year before walking it back early in 2024, before getting dovish again in Q3 with the double rate cut.

Take a look at today’s deep dive into the crypto/ai breakdown today - we think it’s the sector that will bubble up the most in 2025 and selecting the winners will lead to outsized gains.

It’s a highly speculative space but investors are clamoring for high-beta AI exposure as most of the investable equities in the space are large cap already, and many are not pure AI bets.

We’re nibbling right now but expect ridiculous volatility. Treat them as venture bets as many will go to zero if you’re going to play.

I’ve been told that you guys want the raw plays as I’m speculating myself, and not to wait until they’re a little more derisked before sharing.

It would’ve led to you getting 100x’s on WIF and GOAT, instead of a 10x’s, but it also would’ve led to several coins that went down 80%.

With that said, we like AI16Z, Zerebro, Griffain, Fartcoin, GOAT, Alchemy AI, and Virtuals.

Yes, we said we like Fartcoin.

GL!

Today’s FOMC Meeting: All About Guidance

Synopsis:

The Federal Reserve is poised to announce a 25 basis point rate cut at its meeting on December 18, 2024, lowering the federal funds target range to 4.25%-4.50%. This marks the third reduction this year, totaling a one percentage point decrease. Despite persistent inflation, with the Consumer Price Index rising 2.7% year-over-year in November, the Fed aims to align with market expectations while maintaining economic stability. Future rate cuts in 2025 are expected to proceed at a more gradual pace, influenced by the incoming Trump administration's fiscal policies, including potential tariffs and tax cuts.

The Details:

• Expected Rate Cut: A 25bps reduction is anticipated, bringing the federal funds rate to 4.25%-4.50%.

• Inflation Trends:

  • November CPI increased by 2.7% year-over-year, up from October's 2.6%.

  • Core inflation rose by 3.3% year-over-year, indicating persistent price pressures.

• Labor Market:

  • Unemployment rate edged up to 4.2%, suggesting slight softening.

  • Job gains remain solid, reflecting ongoing labor market resilience.

• Market Reactions:

  • U.S. stock futures have shown modest increases ahead of the Fed's decision.

  • The dollar strengthened, with the dollar index rising 0.2%.

• Fed's Forward Guidance:

  • Policymakers signal a slower pace of rate cuts in 2025, adopting a cautious approach amid persistent inflation.

  • The incoming administration's fiscal policies may influence the trajectory of future monetary policy decisions.

WHY IT MATTERS:

The anticipated rate cut reflects the Fed's attempt to balance economic growth with inflation control. Persistent inflation and potential fiscal stimulus from the incoming administration could limit the scope for further rate reductions in 2025. Investors should prepare for a cautious monetary policy stance, with implications for interest-sensitive sectors and overall market liquidity.

Key Takeaways:

• Third Rate Cut in 2024: Brings cumulative reductions to 100bps this year.

• Persistent Inflation: November CPI at 2.7%, exceeding the Fed's 2% target.

• Labor Market Dynamics: Unemployment at 4.2%, with solid job gains indicating resilience.

• Market Sentiment: Positive ahead of the Fed's decision, with stock futures inching higher.

• Future Policy Outlook: Slower pace of rate cuts expected in 2025, influenced by fiscal policy developments.

Nvidia Faces Anti-trust Probe In China

The Convergence of Crypto and AI: Unpacking the Potential of AI Agent Networks and Utility Memecoins

Introduction

The fusion of artificial intelligence (AI) and blockchain technology is emerging as one of the most exciting trends in crypto. At its core are AI Agent Networks and AI-themed memecoins, each offering a mix of novelty, utility, and viral potential.

• AI Agent Networks: Autonomous AI-powered systems designed to execute tasks, collaborate, and interact within decentralized ecosystems.

• Utility Memecoins: Tokens initially driven by cultural memes and community hype, now evolving into assets with practical applications.

Proponents believe the sector could grow to $250 billion in market cap, leveraging global trends in AI investment, increasing crypto adoption, and improving liquidity conditions.

The Underlying Principles: Why AI in Crypto?

1. What Are AI Agents?

An AI agent is an autonomous software system capable of executing tasks or making decisions based on data inputs. In blockchain contexts, these agents interact with smart contracts and decentralized applications (DApps), acting as intermediaries for users or organizations.

Key Properties:

• Autonomy: Operates without human intervention.

• Goal-Oriented: Optimizes for specific objectives like trading, portfolio management, or content creation.

• Learning: Uses machine learning to adapt to new environments or data.

2. Why Use Blockchain?

Blockchain's decentralized nature provides a secure, transparent, and trustless environment for deploying AI agents. Key advantages include:

• Data Integrity: Immutable records ensure AI decisions are auditable.

• Interoperability: Agents can interact across platforms using tokenized incentives.

• Longevity: Blockchain ensures agents and their outputs persist over time, even if centralized entities fail.

The Evolution of AI Memecoins

AI-themed memecoins like $GOAT initially thrived on speculative hype, driven by viral narratives and meme culture. However, recent projects are integrating utility, moving beyond simple speculative value.

Examples:

1. Zerebro:

   • Origin: AI-driven multimedia content creation.

   • Utility: Plans to integrate DeFi mechanisms like yield farming.

   • Challenges: Limited token value accrual despite high technical scores.

2. Alchemist AI ($ALCH):

   • Origin: An AI-powered application development platform.

   • Utility: Monetization through app fees and token payments.

   • Challenges: Concerns over sustainability due to the anonymous team.

Market Dynamics

1. Current Valuation

The sector is valued at $10 billion, with significant growth potential based on parallels to:

• DeFi: Reached $90 billion in market cap during its peak, accounting for ~5% of the total crypto market.

• Meme Coins: Assets like Dogecoin reached $60 billion, driven by cultural virality.

2. Projected Growth

• Market Assumption: If the total crypto market reaches $5 trillion, AI Agent Networks capturing 5% of this would translate to a $250 billion market cap.

• Investment Drivers:

  • Nation-state adoption of Bitcoin as reserve currency.

  • Policy shifts favoring crypto and AI innovation in the U.S. and abroad.

  • Increasing AI adoption in non-crypto sectors (e.g., OpenAI, NVIDIA).

Key Players and Their Scores

1. ai16z

• Strengths:

  • Leading in technical innovation via its ElizaOS framework.

  • Partnerships with Nous Research and Solana Foundation enhance credibility.

  • Open-source collaboration fosters rapid development.

• Challenges:

  • Initial controversies have impacted virality scores.

2. Zerebro

• Strengths:

  • Combines creative AI with DeFi potential.

  • High adaptability across multimedia formats.

• Challenges:

  • Execution risk in delivering promised DeFi utilities.

3. Virtuals

• Strengths:

  • Enables AI agent tokenization and collaboration.

  • Early ecosystem adoption supports growth.

• Challenges:

  • Competition from other agent platforms.

4. Truth Terminal

• Strengths:

  • The AI Agent that started it all, should continue to show sector leadership

  • Expanding and opening agent platform dubbed Loria

• Challenges:

  • Founder is an AI decellerationist, may build conservatively

  • Do you buy GOAT, FARTCOIN, or both?

How AI Agent Networks Work

1. Technical Architecture

AI Agent Networks consist of:

1. Data Layer:

   • Collects data from oracles (e.g., Chainlink) and APIs for real-time insights.

2. AI Decision Layer:

   • Employs machine learning models (e.g., GPT-4, reinforcement learning) to process data.

3. Blockchain Interaction Layer:

   • Executes actions like trades, governance votes, or smart contract interactions.

2. Use Cases

• Trading Bots: Execute trades autonomously based on sentiment and market data.

• Governance: Participate in DAOs, analyzing proposals and voting intelligently.

• Content Creation: Generate art, music, or text autonomously.

Opportunities and Challenges

Opportunities

1. Mass Adoption:

   • AI agents simplify blockchain for non-technical users, driving adoption.

   • Projects like Alchemist AI allow developers to create applications easily.

2. Economic Impact:

   • AI-driven DeFi could streamline financial operations, reducing inefficiencies.

   • Autonomous agents managing real-world assets introduce new revenue streams.

Challenges

1. Speculative Hype:

   • Many projects lack clear utility, raising risks of bubbles or scams.

2. Regulatory Risks:

   • Governments may target AI-driven automation for compliance or taxation.

3. Execution Risks:

   • Scaling and ensuring data integrity remain technical hurdles.

A Framework for Investors

Key Evaluation Criteria

1. Utility: Does the project solve real-world problems?

2. Tokenomics: Are incentives sustainable and aligned with growth?

3. Team Credibility: Does the team have a track record of execution?

4. Market Fit: Is there demand for the project's use case?

Risks to Monitor

• Market Overcrowding: Too many projects with similar goals dilute value.

• Technological Barriers: Building scalable, autonomous AI systems is complex.

• Adoption Rates: Slow adoption could limit network effects.

Conclusion

AI Agent Networks and utility memecoins represent the next frontier of innovation in blockchain. While the space is nascent and speculative, the convergence of AI and crypto opens up transformative possibilities for finance, content creation, and governance.

Key Takeaways for Investors:

1. Focus on Utility: Projects like ai16z and Zerebro with clear use cases are better positioned for long-term success.

2. Embrace Risk Management: Diversify investments to hedge against market volatility.

3. Stay Updated: The space is evolving rapidly, and new opportunities will emerge.

A Knockout Night of Sleep, Powered by Plants

• THC & CBD to relax and fall asleep

• CBN to keep you asleep through the night

• Save 25% with code SLP25

Try Risk-Free

Got feedback? Follow the writer on Twitter @frank_locascio and send a message.

The BRRR is meant for informational purposes only. It is not investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions.ll