- Virtuals Protocol (VIRTUAL) drops 43%, plunging below $3 after 2024’s big gains.
- Smart money investors and top profit leaders offload tokens, triggering major declines.
- Combined, ai16z and VIRTUAL have lost over $2 billion in market value.
Cryptocurrency tokens riding the artificial intelligence wave are now facing reality. Virtuals Protocol (VIRTUAL), once among the top-performing tokens of 2024, has dropped by 43%, crashing below $3. Similarly, ai16z, a popular AI-themed token and the third-largest Solana meme coin, has lost over 50% of its January peak. Together, these tokens have shed a staggering $2 billion in market value, leaving many investors questioning their positions.
Smart Money and Profit Leaders Exit the Scene
Data from Nansen reveals a clear trend: the most profitable traders are cashing out. For instance, one top ai16z trader walked away with $39 million after selling their entire token stash. Another made $19 million, also exiting most of their position.
It’s not just profit leaders taking their gains. Smart money investors, those with proven track records in crypto, are also reducing exposure. The number of smart money wallets holding ai16z has fallen from 124 in December (holding 1.24 billion tokens) to just 80 wallets, now holding 934 million tokens.
For VIRTUAL, the story is much the same. LVT Capital, its most profitable investor, realized a whopping 4,082% ROI, earning $5.5 million before selling their entire position. This behavior, while common in crypto, has left retail investors holding the bag as hype fades and the early movers cash out.
The Pattern of Hype and Decline
This trend isn’t unique to AI-themed tokens. Other hyped-up projects like PNUT, Kekius Maximus, and Mother Iggy followed a similar trajectory—initial surges followed by sharp declines as the excitement died down.
While AI tokens have shown promise due to the growing artificial intelligence industry, recent price crashes highlight how quickly market sentiment can shift. The AI agent industry, valued at $5.29 billion in 2024, is expected to grow at a 40% CAGR through 2035, but that growth might not always translate to sustained token value.
Final Thoughts: Caution in Hype-Driven Markets
AI tokens like VIRTUAL and ai16z illustrate the volatility of hype-driven markets. Early movers reap the rewards, while latecomers often bear the brunt of sharp corrections. As the AI industry expands, it’s crucial for investors to separate long-term opportunities from fleeting trends.
