NEAR Protocol (NEAR) has been cited as a project set to benefit as the cryptocurrency market reshapes around an artificial intelligence (AI) theme.

On Oct. 13 (local time), blockchain outlet U.Today reported that market maker Wintermute said in a recent report that NEAR has taken the lead in the AI-related sector even as major tokens weakened.

The starting point for the latest move was a hawkish stance by the U.S. Federal Reserve. Fed minutes confirmed that many officials expect additional rate hikes before year-end, and the U.S. 10-year Treasury yield rose to 5.24 percent. The stock market notched weekly gains as corporate earnings expectations provided support, with the S&P 500 rising 1.2 percent to a record high, but the cryptocurrency market faced pressure from outflows.

Spot bitcoin exchange-traded funds saw weekly outflows of $679 million. That was the largest outflow since June. Spot ether ETFs also recorded net outflows of $542 million. Forced liquidations totaled $1.19 billion, CoinGlass data showed, including $1.06 billion in long positions.

Spot prices also weakened. Bitcoin fell about 2.4 percent over the past seven days to the $83,000 range, and ether fell about 7 percent and is hovering above $2,500. An Ethereum Foundation researcher urging users to move funds to new addresses was also cited as a factor amplifying ether weakness.

The direct hit was concentrated across altcoins. The median decline in the altcoin sector was 3.7 percent, and Uniswap (UNI), which had recently been strong, plunged 15.8 percent. Of the top 66 projects by market value, only 11 ended higher.

Investor funds did not fully move into cash. Money that left traditional decentralised finance (DeFi) platforms shifted to tokens linked to AI technology, with NEAR at the center of that move.

The NEAR network introduced support for post-quantum digital signatures to strengthen security. Funds that had been shorting NEAR in line with the broader market decline were caught in a short squeeze during the price rebound. Forced buybacks of short positions further increased NEAR's gains.

Wintermute drew a line against aggressive buying of altcoin rebounds. It judged that altcoins remain risky until U.S. Treasury yields stabilise and spot bitcoin ETF flows turn back to net inflows. The market is therefore looking to the U.S. consumer price index (CPI) and earnings releases from major technology companies as the next variables. Observers say whether the global AI trend continues to supply liquidity to the industry also depends on those indicators.

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