Elon Musk’s latest move in artificial intelligence, the launch of Grok 3, has sent shockwaves through both the AI and cryptocurrency markets. The announcement, made on Musk’s X (formerly Twitter) account, propelled the Grok token to a 50% rally in just 24 hours, climbing from $0.003901 to $0.005886. Over the past week, the token has surged by an impressive 86%, bringing its market cap to $35.5 million. However, despite the recent momentum, it remains 81% below its peak of $0.02971, reached during the initial hype in November 2023.

During a video call at the World Government Summit in Dubai, Musk emphasized Grok 3’s superior reasoning abilities. “Grok 3 has very powerful reasoning capabilities. In the tests we’ve done thus far, it’s outperforming anything that’s been released, so that’s a good sign,” he stated.

The announcement has fueled speculation across the crypto community, particularly with a scheduled live demo of Grok 3 set for Monday at 8:00 PM Pacific Time. Investors have taken note of Musk’s claim that Grok 3 is the “smartest AI on Earth,” a statement that has only further intensified the hype around the token. Historically, Musk’s ventures have wielded significant influence over token markets, as seen when Grok-related tokens surged over 30,000% in late 2023 following xAI’s initial AI model debut. However, questions remain over the long-term sustainability of such price rallies, given the volatility tied to Musk-driven market movements.

The competition for AI dominance is fiercer than ever, with Grok 3 entering an arena already dominated by OpenAI’s ChatGPT and Google’s Gemini. More recently, China’s DeepSeek has emerged as a formidable player, offering a cost-efficient AI model that challenges existing tech giants. While xAI has secured $6 billion in funding from major investors like Nvidia and AMD, it remains an underdog compared to OpenAI, which recently rejected Musk’s staggering $97.4 billion buyout bid.

Beyond AI, Musk’s broader business ventures are under scrutiny. Tesla has seen a drop in global sales, and X has suffered a decline in active users since his acquisition. However, xAI continues to expand rapidly, with a reported valuation of $75 billion, signaling that investors remain optimistic about Musk’s AI aspirations.

As Grok 3 nears its official debut, Musk has hinted at groundbreaking new features. The model has reportedly been trained on synthetic data and is designed to reflect on and correct its own mistakes, aiming for higher logical consistency. Additionally, Grok chatbot services are expanding beyond X and will soon be available as a standalone application. xAI’s hiring spree, which includes thousands of new employees, positions the company as a serious contender in the AI industry.

Meanwhile, Musk is also locked in a legal battle with OpenAI, challenging its shift to a for-profit structure. His recent bid to acquire OpenAI and his ongoing rivalry with CEO Sam Altman highlight the escalating battle for dominance in the AI sector. Altman, rejecting Musk’s offer, sarcastically suggested buying X instead, fueling further controversy between the two tech moguls.

As the AI arms race intensifies, all eyes are on the upcoming Grok 3 demo. Will it live up to the hype, or is this another fleeting Musk-driven market rally?