Author: Connor Dempsey

Translated by: Deep Tide TechFlow

Deep Tide Introduction: Connor Dempsey is a veteran in the crypto industry, having worked at Circle, Messari, and Coinbase Ventures, and currently leading market efforts at Crossmint. In this brief commentary, he puts forward a viewpoint: China is driving AI companies to go public rapidly at reasonable valuations under the logic of "common prosperity," while their American counterparts will not IPO until the end of 2026, at which time their valuations might be 100 times that of Chinese companies. The AI IPO wave will continue to siphon off market funds, putting short-term pressure on crypto, but 2026 may turn out to be a good year for early investments.

Main Text:

A wave of IPOs from Chinese AI companies is coming and will last for 1-2 years.

Moreover, their valuations are more attractive than their American counterparts.

Note: The following content comes from a conversation I had with an old friend familiar with the Chinese market (the Chinese market is essentially a black box for me).

The Logic of China

The pace of AI development in China is as fast as in the US. However, China exerts stronger control over the private sector, and they are concerned about the wealth gap.

The logic is this: AI is a winner-takes-all game. The longer companies are private, the more wealth becomes concentrated in the hands of a few entrepreneurs and investors.

Chinese policies have applied pressure on rapidly growing AI companies to go public earlier, allowing ordinary investors to share in the dividends.

MiniMax (AI video generation) and Zhipu (China's OpenAI) are already listed. Dark Side of the Moon (chatbots), Baichuan Intelligence (medical AI), and Kunlun Chip under Baidu are queued up, with expected valuations between $2 billion and $7 billion, which is considered reasonable. DeepSeek is the only exception, claiming it will continue to maintain private financing.

As a Westerner, I do not intend to take sides with China, but this line of thinking makes sense. The American AI giants will not distribute comparable levels of wealth to the public.

The Pace of the US

The US is also experiencing a wave of AI IPOs, expected to kick off from late 2026 to early 2027. OpenAI, Anthropic, Databricks, Perplexity, and Elon Musk's xAI (after merging with SpaceX) should go public within this timeframe.

However, by the time ordinary investors can buy in, these companies’ valuations could be 100 times that of their Chinese counterparts.

OpenAI and Anthropic are likely to reach a trillion-dollar valuation by the time they go public. Databricks and xAI have already surpassed $100 billion.

AI is the Only Game in Town

No matter how it ultimately evolves, the US-China AI race will accelerate, and it may drain the air from all other tech tracks, including crypto.

Why? Because AI is the most important technology of our lifetime. If you are a capital allocator, it is difficult to look in another direction right now. For example, if you have $1 million to deploy, you will likely find a way to ride this AI wave.

As long as the feast of AI IPOs continues, crypto asset prices are likely to be under pressure.

Venture capital in the crypto space has clearly slowed down. I recently encountered an entrepreneur raising funds in the crypto circle, and his observation is: If you are not in AI, most investors are simply not interested.

The Silver Lining

Emotions have hit rock bottom, and investors have lost interest; this is not new for crypto. For example, after the ICO bubble burst in 2018, the majority of the investing public was indifferent to crypto for the next two years.

But if you were an early investor during that period, you did quite well. The seed rounds for Solana, Compound, and Uniswap were all invested in during that time. Circle's USDC (2018) was also built during that period.

I believe that for those still deploying early capital in the crypto space, 2026 might yield a similarly good year.

Meanwhile, US crypto regulation is becoming clearer, and infrastructure development around tokenizing financial markets is underway.

Protocols like Hyperliquid have begun to spill over into traditional markets, providing 24/7 crude oil futures trading during the weekends when traditional markets are closed (see Syncracy's "The Great Perpification").

Although there are fewer crypto founders now, there are still new interesting companies starting up. For instance, Ryan Yi has founded Onchain Group, leveraging four years of VC and corporate development experience at Coinbase, essentially creating an investment bank for token economies. It can be thought of as traditional M&A, but the targets have been switched to tokens, with clients being the biggest protocols in the crypto space.

AI is the Variable for Crypto

While AI has sucked the air out of the room from an investment perspective, it will ultimately become the rocket fuel for crypto's practicality.

Crypto has always had user experience issues. Combining AI front ends with crypto back ends will make using crypto suddenly as simple as using Claude or ChatGPT. This will ultimately become a mass entry point for crypto assets and protocols.

AI Agents are also expected to become the largest user group for crypto. The commerce between Agents—millions of AI Agents trading autonomously without human involvement—is one of the strongest use cases for stablecoins and blockchain. When you need millions of Agents to create wallets and transact at fractions of a cent, traditional card networks will collapse. Crypto will not.

I bet that the integration of crypto and AI will be a big deal in its mature stage. It will also be one of the most noteworthy phenomena in the history of this industry.

~CD