The market for AI-tagged cryptocurrencies has suffered a sharp decline in the last seven days, leaving many tokens with significantly reduced valuations. This downturn comes as the broader crypto market continues to trade sideways, which has seemingly heavily impacted the AI token sector.
According to market data trackers, ai16z was one of the hardest hit. The token, which supports a DAO-run venture fund and the Eliza OS agent framework, has seen its price go down by nearly 50% in the past week, trading at a weekly low of $1.03.
ai16z’s market cap has also dropped to $1.13 billion. Over the past 24 hours alone, the token shed 11% of its value, while its trading volume has increased by 25% within the same period.
Similarly, the Virtuals Protocol token, which powers a decentralized platform for creating AI-driven digital assistants, saw a notable 16% decrease in price in the last 24 hours, bringing its value to $2.34.
This follows a staggering 44% drop over the past week, which has driven the token’s market cap down to approximately $1.5 billion. The token’s decline is in line with the wider trend of falling prices across the AI token sector.
AI tokens face massive drops, following crypto market trends
Aside from AI token giants ai16z and Virtuals Protocol, other tokens are also finding it hard to produce gains. The Swarms framework token, which had been trading just above $0.5, experienced an even sharper decline of over 55% this week, dropping to $0.20.
Niche projects like Goatseus Maximus, a meme-based AI token, were not immune to the broader downturn. The token saw a week-long 40% reduction in price, falling from $0.5 to $0.33 according to Coinmarketcap data.
NEAR Protocol, once a leader in the AI token space, dropped by approximately 24% over the last week, leaving its market capitalization at a solid $5 billion.
Even 0x0.ai, an AI project that verifies smart contracts on the Ethereum network, suffered heavy losses of more than 10% within the last 24 hours, and a 45% downtick in 30 days.
However, some projects managed to push through the wall of red, with coins like ChainGPT, Ozone Chain, and Neur.sh trading in the green.
AICC token controversy emerges amid ongoing market declines
In other news, AICC, a project aimed at leveraging AI technology within the cryptocurrency space, has been plagued by accusations of mismanagement and unethical practices. The token faced a severe 47% drop in just 24 hours, according to PeckShieldAlert.
#PeckShieldAlert $AICC has dropped -47% within the last 24h pic.twitter.com/7Dzyop4W4O
— PeckShieldAlert (@PeckShieldAlert) January 13, 2025
Critics have pointed to a range of problems with AICC’s token distribution, which has been heavily criticized for favoring insiders and influencers.
Many in the community, including X users have accused the launch of resembling a “pump and dump” scheme, with the token’s value artificially inflated before being sold off by a select group of individuals.
A brief AICC review based on community feedback:
Launch Critique: $AICC's launch was criticized for favoring insiders and influencers, leading to accusations of unfair distribution and a "pump and dump" scenario.
— ai16mc (@ai16mc) January 11, 2025
The development team, led by consultant and ai16z founder Shaw, has been scrutinized, with investors questioning his expertise, calling him a “very bad programmer.”
This sentiment was further amplified by allegations of undisclosed token allocations and insider trading, which has resulted in the loss of investor trust.
One X user labeled the project as a “scam,” citing the ongoing sale of tokens by project partners and the lack of substantial capital investment.
Concerns about market manipulation have further fueled the controversy.
Research by X user @rickytheirish uncovered a situation where tokens were allegedly sold off while the project’s fundraising was still ongoing. This created a small liquidity pool on the decentralized exchange Raydium, inflating the market cap and misleading investors about the project’s true value.
Arkham Intelligence identified funds transfers where AICC tokens were sent to an individual named “insiderjudas,” who went on to dump the tokens.
They sent $150K of AICC tokens to a guy called “insiderJudas”
He IMMEDIATELY started dumping
You can’t make this up pic.twitter.com/jsuDQ3KW8Q
— Arkham (@arkham) January 11, 2025
Despite these growing concerns, the response from the AICC team has been largely defensive, with few public statements addressing the specific allegations. Some defenders have argued that rewarding advisors and key contributors is a standard practice.
However, these arguments have been met with skepticism from the wider community, as the project’s ethical issues remain unresolved.
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