The AI token market experienced a significant downturn this week, losing over $3 billion in market cap.
TL;DR…
- Presidential Impact: Following Trump's inauguration, the $100 billion "Stargate" AI initiative raised concerns, particularly from Elon Musk, regarding its potential impacts.
- Crypto Market Dynamics: Bitcoin briefly reached an all-time high of over $109,000 before receding; major coins like Bitcoin, XRP, and LINK show resilience; the altcoin sector fell by $28B.
- AI Sector Downturn: The AI token market saw a significant downturn, shedding over $3 billion in market cap, with all top 10 AI tokens experiencing declines this week.
- Notable Performers: In contrast to the broader market, select AI tokens such as Artificial Liquid Intelligence (ALI) and Assemble AI (ASM) recorded substantial gains, highlighting some positive movement.
With Donald Trump recently inaugurated as president, news of multiple significant U.S. policy shifts, and the launch of the $TRUMP meme coin, it’s safe to say it’s been a crazy week.
Unfortunately, this craziness didn’t bode well for the AI token sector.
Let’s dive into the details.
>> Did you miss last week’s AI update? Check it out here.
Market Overview
After briefly hitting an all-time high (ATH) of over $109,000, Bitcoin (BTC) and the rest of the cryptocurrency market cooled off somewhat over the last week.
Bitcoin (BTC) and just a handful of so-called "dino coins" managed to stay green in this period of high volatility, including the likes of XRP, Chainlink (LINK) and Hedera (HBAR).
Though the total market cap (TOTAL1) is up to 2.5% from $3.5 trillion to $3.59 trillion, this is largely attributed to the growth of BTC, which returned 4.8% in the last seven days.
Source: CoinMarketCap Charts Page
Meanwhile, the altcoin market saw $28 billion wiped off its market capitalization over the same period.
Despite the choppy conditions, the market remains somewhat bullish, with the CMC Crypto Fear & Greed Index sitting at 66—its highest value in over a month.
AI Market Recap
Like most sectors, the AI sector was hit hard this week, with the vast majority of AI tokens in the red over the last seven days.
Source: Top AI & Big Data Tokens Page
Overall, the sector has seen more than $3 billion wiped off its market cap over the last week, seeing it fall back $49.2 billion—erasing two months of growth.
As it stands, more than 90% of AI tokens are down over this period, including every top 10 AI token by market capitalization (mcap).
Some of the worst affected tokens suffered over 20% losses during this time. These include:
- ChainGPT (CGPT): lost 31.3%
- neur.sh (NEUR): lost 29.5%
- Zero1 Labs (DEAI): llost 26.1%
- Cookie DAO (COOKIE): lost 25.7%
Meanwhile, a handful of AI tokens managed to buck the trend, even achieving a positive seven-day return.
Some of this week’s best performers include:
- Artificial Liquid Intelligence (ALI): gained 42.3%
- Assemble AI (ASM): gained 37%
- DeXe (DEXE): gained 17.5%
- Delysium (AGI): gained 2.5%
>> Click here to keep tabs on the latest and greatest AI agent tokens.
The AI Agent token subsector didn’t hold up so well either. The vast majority of well-known AI Agent tokens are down, with many falling back to support levels.
That said, a handful have continued to demonstrate strength. These include Acolyte by Virtuals (ACOLYT) and Freya by Virtuals (FREYA), which gained 35.6% and 32% respectively.
The AI sector now counts among the worst-performing sectors in terms of mcap-weighted performance. The sector saw its mcap weighting drop by 9.2% against other sectors in the last week, ranking it 16th out of the 22 sectors tracked by the platform.
Source: DefiLlama
Meanwhile, the Solana, PolitiFi, and Oracle sectors experienced the best relative performance, with mcap-weighted returns of 27.4%, 27%, and 12.6% respectively in the last seven days.
AI News Roundup
It’s been another eventful week in the AI sector, with several major developments and announcements hitting the headlines.
We’ve sifted through the most significant stories to bring you this week's highlights below:
Trump and SoftBank Launch $100 Billion AI "Stargate" Initiative: Donald Trump and SoftBank's CEO Masayoshi Son have announced a $100 billion investment in an AI project named "Stargate," aiming to bolster U.S. AI infrastructure and create 100,000 jobs. The project has drawn criticism from Elon Musk, who raised concerns about its execution and potential impact on the competitive landscape of AI development.
Google Invests $1 Billion in Competing AI Firm Anthropic: Google has invested over $1 billion in AI startup Anthropic, following a trend of significant financial commitments by major tech companies to AI development. Anthropic, known for its Claude AI chatbot, has also attracted $8 billion from Amazon, positioning itself as a major player in the competitive AI landscape.
Nillion Launches Alpha Mainnet and Announces NIL Airdrop: Nillion has launched its Alpha Mainnet and announced a NIL airdrop to decentralize its network. The airdrop aims to distribute 75 million NIL tokens to various community contributors and early builders, enhancing network governance and participation. Eligible participants include community volunteers, developers, and validator program participants, with registration open until Feb. 3.
Ondo-Based L2, Ondo DeFAI, Announces IDO: Ondo DeFAI, a platform that merges artificial intelligence with decentralized finance (DeFi) has announced its IDO (initial DEX offering) on Ape Terminal and Polkastarter, raising funds at a $3 million FDV. The platform leverages Ondo's USDY (T-bill-backed stable asset) and a suite of autonomous on-chain agents to enhance trading and lending.
>> That’s all for this week’s AI update. Join us next week for more AI news, developments and analyses!
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