Alpha Transform Holdings Announces February Results for AI Index Performance

Alpha TransformAI 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 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. 

February 2024 Results

AAI outperformed the broader crypto market with a 70.6% return, a sign of the growing consensus that the narrative of crypto and AI has staying power and will be a core driver of the current bull market. AI-linked companies such as NVIDIA (up 28.6% in February) continued to outperform, which also provided a lift to AI tokens. The direct effect can be observed on February 21st when NVIDIA announced a major Q4 earnings beat, taking AI tokens such as RNDR up 7% on a day that BTC was down 1.1%. While index leaders TAO and RNDR posted strong returns of 31.4% and 72.7% respectively, they were outshined by the mid-cap constituents of the index in February – crypto intelligence platform Akrham (ARKM) and AI bot creator PAAL AI (PAAL) with returns of 294% and 269.1%. The index value increased from 112.1 to 191.23 at month-end. 

In the March 2024 rebalance, the index saw the addition of three new constituents: Theta Network (THETA) and Theta Fuel (TFUEL), which are the staking and gas tokens respectively of the Theta blockchain, and GenAI / GPU provider enqAI (ENQAI). Theta has been a leading example of decentralized streaming and compute since its launch in 2019, a DePIN protocol long before that term came into vogue. Recently, Theta has made AI compute work a top priority after adding AI startups Lavita and FedML as integrations in their decentralized edge network, warranting the tokens’ inclusion in the AAI. Meanwhile, ENQAI qualifies after a stellar 537.7% return in February, pushing it into the top 30 AI tokens. They will debut with weights of 10.4% (THETA), 2.6% (TFUEL), and 0.4% (ENQAI) in the index. As the AAI is capped at 30 constituents, the three lowest market cap tokens (TOKEN, GSWIFT, KEY) drop out of the index for March. The new weights of the index are as follows:

Index Construction and Rebalancing Methodology

Alpha Transform uses 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. 

About Alpha Transform Research

Active Investing in the Blockchain Economy.™

Alpha Transform Research is provided by Alpha Sigma Capital Advisors, LLC, the Investment Manager for the Alpha Blockchain/Web3 Fund and Alpha Liquid Fund.  Alpha Sigma Capital (ASC) investment funds are focused on emerging blockchain companies that are successfully building their user-base, demonstrating real-world uses for their decentralized ecosystems, and moving blockchain technology towards mass-adoption. ASC is focused on companies leveraging blockchain technology to provide value-add in areas such as fintech, AI, supply chain, and healthcare. Apply to receive research at  www.alphasigma.fund/research.  Subscribe to https://substack.com/@alphasigmaresearch.

About Alpha Transform Holdings

Alpha Transform Holdings (ATH) is a digital asset organization dedicated to ushering in the future of blockchain-powered Web3. With our deep knowledge and expertise, we invest in and advise innovative companies and decentralized projects that leverage blockchain technology to revolutionize traditional industries such as financial services, healthcare, media & entertainment, and more. We work closely with portfolio companies to drive value while creating outsized returns and are renowned for our detailed research on growing blockchain initiatives. Our mission is simple: to accelerate the mass adoption of distributed ledger technology through investments that provide impactful solutions with long-term sustainability. Our vision is an open, connected world powered by secure decentralized systems so that everyone can benefit from the new tech economy. https://www.alphatransform.io/

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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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