Crypto: AI Tokens Plunge Nearly 5 Billion In 3 Days!

The euphoria surrounding the artificial intelligence (AI) token sector took a hit this October, with a loss of $4.69 billion in just three days. While investors were expecting a recovery traditionally associated with this month, it was a declining market that marked the start of this quarter. This sudden volatility, affecting a sector often perceived as ushering in revolutionary innovations, is intriguing.

The sharp decline of AI tokens: a declining market

The market for tokens related to Artificial Intelligence and big data experienced a drop at the beginning of October, with a $4.69 billion loss in market capitalization in just three days. Indeed, on September 30, 2024, the capitalization of this sector was $38.82 billion, but it plunged to $34.13 billion on October 3. This decline was marked by significant drops in major tokens like Near Protocol (NEAR), which lost 14.88% in a week, and Internet Computer (ICP), which fell by 13.35%. According to CoinMarketCap data, these figures raise questions about the short-term viability of the sector of AI-related cryptos.

Aside from NEAR, other tokens were also hit by this slowdown, notably Bitensor (TAO), which fell by 9.37%, and Render (RNDR), down by 13.64%. These losses occur in an overall difficult context for the entire crypto market, marked by geopolitical uncertainties, increased regulations, and macroeconomic concerns. October’s performance is particularly disappointing, as many hoped for a recovery after the summer’s difficulties. But, as often in the crypto universe, nothing is ever set in stone, and turnarounds remain possible.

External factors intensify the downward trend

Beyond the usual fluctuations of the crypto market, this debacle of AI tokens is amplified by major external factors. Geopolitical uncertainties, such as the ongoing conflict in the Middle East, have increased investor distrust, leading some to withdraw from riskier markets like crypto. Additionally, global economic challenges, combined with increasing regulatory pressure on the crypto sector, have contributed to this massive wave of selling. These external tensions have played a key role in the rapid decline of AI tokens, even as the technological fundamentals of the sector remain solid.

Despite this severe correction, it’s important to note that the AI tokens market has experienced significant growth over the past three months. In July, the sector’s capitalization was around $20 billion, meaning that, despite the current drop, the market has still grown by over $13 billion since this summer. This sudden decline could be interpreted as a mere correction following a period of strong expansion. However, short-term prospects remain uncertain, with volatility that could persist until the end of the year.

Current events demonstrate the fragility of a still young market subject to complex dynamics. If the October correction marks a halt for AI tokens, it does not seal their fate. The crypto market, in constant evolution, could well hold surprises, and AI tokens, despite this turbulence, retain long-term development potential.