The largest cryptocurrencies, including bitcoin and ether, continue to underperform after losing their May 10 local highs. Since then, BTC and ETH have fallen roughly 8% and 13%, respectively. With majors stuck in consolidation, parts of the crypto market are once again rotating into altcoins.

This time, however, the dynamic looks different from the indiscriminate “altcoin frenzy” cycles of previous years. Capital appears far more selective, concentrating around projects tied to one of the strongest narratives in technology today: artificial intelligence.

Over the past week, several AI-related coins posted outsized gains despite the broader market’s weakness. Decentralized prediction market protocol “for the agentic era” Rain (RAIN) surged 76%, decentralized AI memory layer Unibase (UB) climbed 67%, AI-focused blockchain NEAR Protocol (NEAR) gained 54%, AI automation platform Artificial Superintelligence Alliance (FET) rose 31%, while decentralized GPU network Render (RENDER) added 22%. Even Worldcoin (WLD), a biometric identity project, rallied 53%. The project, co-founded by Sam Altman, is positioning itself as infrastructure for human verification in an AI-dominated economy.

                                                               Top-100 cryptocurrencies’ 1-week performance. Source: Crypto Bubbles

NEAR’s AI-focused upgrades catch market attention

Among the rally’s biggest surprises was NEAR. Despite years of AI-friendly positioning, some observers questioned whether the blockchain truly offered meaningful advantages for AI applications beyond the standard programmability shared by most smart-contract networks.

NEAR’s recent sharp move higher coincided with a series of announcements between May 20 and May 22 focused on privacy, AI infrastructure and network scalability. Built on NEAR’s infrastructure, crypto startup Trezu unveiled confidential treasury tools for private multisig coordination and enterprise cross-chain payments across more than 35 blockchains. Furthermore, NEAR AI unveiled automatic PII anonymization, a system designed to anonymize sensitive prompt data before it reaches models such as ChatGPT, Claude or Gemini. The goal is to address one of the growing concerns around enterprise AI adoption: data leakage and privacy risks.

Another catalyst came from the upcoming dynamic resharding upgrade planned for June 2026. The change would allow the network to split shards automatically as usage grows, theoretically enabling significantly higher throughput without manual coordination.

At the same time, Near co-founder Illia Polosukhin continued to promote NEAR’s “agentic commerce” vision, where autonomous AI agents transact on-chain using intents-based infrastructure. He wrote on X: “… we will focus on making NEAR the home for User-Owned AI. We need AI that optimizes for the privacy and sovereignty of users. NEAR Foundation commits to incubate and invest in NEAR-based AI infrastructure projects including compute and inference, data curation and rewarding creators, crowdsourcing and synthetic data marketplaces, agentic infrastructure, and more...”

Speaking recently on The Rollup podcast, Arthur Hayes, co-founder of the BitMEX exchange, argued that NEAR could deliver 20x upside over the next year. He pointed to NEAR Intents, which allows AI agents to move assets across chains without navigating bridges, fragmented liquidity or multiple wallets.

The return of narrative-driven markets?

The recent rally also highlights a broader shift underway in crypto markets. Unlike previous cycles, where liquidity often spilled indiscriminately across thousands of speculative tokens, investors now appear increasingly focused on sectors capable of attracting real usage, venture capital and long-term infrastructure demand.

AI currently sits at the center of that attention. The narrative combines several themes investors already understand well: compute scarcity, automation, data ownership, privacy, and decentralized infrastructure. In crypto, these ideas naturally intersect with blockchains, token incentives and permissionless coordination.

Still, whether this becomes the start of a sustained AI-altcoin cycle or merely another short-lived speculative burst will likely depend on bitcoin itself. Historically, strong altcoin outperformance tends to emerge only when BTC volatility stabilizes and market participants regain appetite for higher-risk trades.