The AI crypto sector, once hailed in recent months, has faced a brutal setback, casting doubt on its narrative strength. Even longstanding leaders were not spared from the correction, sending portfolios into the red across various timeframes. This decline comes at a paradoxical time as artificial intelligence continues its dominance in global tech news.
Artificial intelligence tokens that recently dominated the market are now experiencing sharp corrections, with monthly drops of 30 to 40% for several major projects. This collapse affects both mid-caps and sector heavyweights, signaling a massive capital rotation out of AI crypto assets.
This movement is particularly striking given that, during the same period, ChatGPT, Claude, and mainstream AI models continue their expansion while tech giants inject billions of dollars into research. This divergence indicates the market is questioning the real connection between AI adoption and blockchain projects.
Sharply declining trading volumes also reflect a gradual retail disengagement. Several major technical support levels have broken, triggering a cascade of liquidations. Long-term holders now face substantial losses, putting their conviction to the test.
The primary factor remains excessive overvaluation. Many AI projects had reached valuations disconnected from their concrete achievements. The market is now proceeding with a brutal correction of speculative excesses, bringing prices back to more consistent levels.
Adding to this is the dilution of the AI narrative. The explosion in the number of projects claiming AI credentials fragments liquidity flows and intensifies competition. Investors now struggle to distinguish technologically sound projects from simple marketing tokens riding the hype wave.
Given this context, investors favor caution and diversification. However, some see this as an opportunity for selective accumulation in projects with real fundamentals. The ability to separate concrete technology from vaporware has now become the central criterion for surviving in this extremely volatile AI crypto sector.
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