The ChatGPT Effect: A Financial Frenzy for Artificial Intelligence Cryptocurrencies

In a world where artificial intelligence (AI) has permeated nearly every aspect of modern life, one can hardly imagine being unaware of OpenAI’s ChatGPT. The state-of-the-art large language model, renowned for its uncanny ability to generate human-like responses, not only triumphed in a Google interview and breezed through law and business school examinations, but also amassed over 100 million users within mere months, claiming the title of the fastest-growing userbase in history.

Tech Giants’ AI Infatuation Sends Wall Street into AI Stock Frenzy

The digital marvel, ChatGPT, ignited an AI renaissance, sending tech behemoths like Google and Baidu into a frenzy to advance their AI ambitions. The response of tech giants to ChatGPT signaled to investors a higher perceived value of AI technology and catapulted AI-centric companies’ share prices to astonishing heights. For instance, AI software company saw its share price skyrocket 28% after announcing the integration of ChatGPT into its AI toolkit. ChatGPT’s influence rippled beyond its immediate circle, elevating share prices for and SoundHound AI, even though they had no direct ties to ChatGPT.

AI Cryptos Cast a Shadow on Bitcoin and Ethereum

In the wake of ChatGPT’s launch and meteoric rise, a remarkable class of AI-centric cryptocurrencies stepped into the limelight. In just two weeks after the launch, SingularityNET (AGIX) and Fetch.AI (FET) leaped a staggering 20% and 50% respectively, leaving well-known crypto giants, Bitcoin (BTC) and Ethereum (ETH) in the shade with a modest 1% gain and 3% decline respectively. This impressive performance of AI-crypto-assets following the ChatGPT launch signals the influence of AI in reshaping the cryptocurrency landscape.

ChatGPT Unleashed: AI Cryptos Defy Bear Market

By using the sophisticated synthetic difference-in-difference methodology, the published article reveals that a group of AI-crypto-assets curated by CoinGecko enjoyed a price boost of at least 10.7% and 35.5% beyond non-AI-crypto-assets in the one-month and two-month period after the ChatGPT launch. This substantial surge in value, exclusively for AI-crypto-assets, is even more significant considering the broader cryptocurrency market was plagued by a bearish outlook and extreme investor uncertainty at that time, as determined by Sentix and This finding lends credence to Bloomberg’s anecdotal reports linking the ChatGPT launch to the AI-crypto-asset boom.

Google Searches Reveal Power of Retail Investors in AI Crypto Boom

The published article dives deeper into the fascinating relationship between retail investor attention and the AI-crypto-asset boom induced by ChatGPT’s launch. Google search volumes for keywords such as “AI,” “Artificial Intelligence,” and “ChatGPT” are key indicators of retail investor attention. Prior to ChatGPT’s launch, these searches had no impact on the pricing of AI-crypto-assets or non-AI-crypto assets. However, post-launch, they were crucial pricing indicators, exclusively for AI-crypto-assets. As searches for AI-related terms surged, so too did the returns on AI-crypto-assets, highlighting the strong association between retail investor attention between retail investor attention online and market performance.

Institutions Flee Crypto: Retail Investors Drive AI Crypto Charge

Institutional investors have financial means and quick reflexes when it comes to responding to market-moving news, but when it comes to the ChatGPT-fuelled mania gripping the AI-crypto-asset market, the published article reveals that retail investors are the main driving force. Before the ChatGPT launch, institutional investor’s interest in ChatGPT and AI, as measured by a proxy based on financial news wires’ frequency and sentiment on Refinitiv’s Thomson Reuters Eikon, had no impact on AI-crypto-assets or non-AI-crypto-assets. However, post-launch, AI-crypto-assets were exclusively affected by institutional investor attention, but to a substantially lesser degree than their retail investor counterparts who led the charge. This finding aligns with JP Morgan’s 2022 survey which found that a staggering 72% of institutional investors had no plans to trade crypto assets in the next five years.

ChatGPT Flips the Script

In the wake of ChatGPT’s spectacular debut, AI-crypto-assets revelled in a meteoric rise in prices. The published article sheds light on several key factors driving this remarkable effect:

  • Perceived Quality: Market efficiency theories suggest that the price of an asset reflects investor’s perceptions of quality (i.e., higher quality assets are valued more highly). The comprehensive media coverage of ChatGPT led to a higher perceived quality of AI related assets, leading retail investors to value AI-crypto-assets more highly.
  • Institutions Step Back: Institutional investors enthusiasm for the crypto space waned, leaving retail investors to take the charge in boosting AI-crypto-asset prices after the ChatGPT launch. Institutional investors had the option to buy AI-related-stocks, even though there are only a few to choose from.
  • Information Diffusion: ChatGPT can help retail investors decipher complex technical concepts, and empower them to make more informed investment decisions.
  • Network Effects: ChatGPT’s launch may have triggered a snowball effect for AI-crypto-assets, attracting more users and propelling demand.

In summary, the confluence of these factors has sent AI-assets soaring to remarkable heights, a testament to the transformative impact of ChatGPT on the market.

Link to the paper:

Link to the open access working paper: