Cryptocurrency investors who chased the artificial intelligence hype may be left holding the bag as their prices drop and smart money investors sell.
Virtuals Protocol (VIRTUAL), one of the best-performing cryptocurrencies in 2024, has crashed below $3 after falling 43% from its highest level this year.
Similarly, ai16z (AI16Z), the third-biggest Solana (SOL) meme coin, has fallen by over 50% from its January high. Combined, the tokens have shed over $2 billion in market value.
While this freefall coincides with the ongoing crypto crash, a closer look at their on-chain metrics show that smart money investors and profit leaders have started selling their positions.
Ai16z profit leaders sell tokens
According to Nansen, the most profitable ai16z trader made over $39 million. This individual basically sold all of their tokens.
Similarly, the third-most profitable buyer made $19 million and sold almost all of his tokens at a big profit.
While most profitable traders still hold their ai16z tokens, many have sold most of their profits to take profits.
Another important Nansen data shows that smart money investors have also dumped their tokens. There are now just 80 smart money ai16z investors with 934 million tokens.
There were 124 of these investors with over 1.24 billion tokens in December. Nansen defines smart money investors as those touting a long track record in the crypto industry (Bitcoin was first mined in 2009, marking the first decentralized cryptocurrency).
VIRTUAL price crashes as big leaders sell
The same selling has happened for the VIRTUAL token as most of its profit leaders have sold their tokens. LVT Capital, the most profitable investor with over $5.5 million in profits, has sold all of its holdings, generating a 4,082% return on investment. Many more VIRTUAL investors have also exited, while smart money investors have sold.
This investor behavior is common in the crypto and stock market industries. Many retail investors embrace the fear of missing out (FOMO) when a token starts going parabolic. Initial investors sell, and many are left holding the bag.
A good example is the recent performance of many of the most popular meme coins, like PNUT, GOAT, Mother Iggy, and Kekius Maximus. As the chart below shows, these tokens surged initially and then plunged as the hype ended.
AI agent tokens have been hyped in the past few months as the artificial intelligence theme has continued thriving.
Studies show that the AI agent industry is growing and has more room to go soon. One of these reports estimates that the industry was valued at $5.29 billion in 2024 and that it would have a compounded annual growth rate of 40% through 2035.
Virtuals Protocol hosts hundreds of projects like G.A.M.E, which has a market cap of $212 million, aixbt with a valuation of $411 million, and Luna’s $65.2 million.
