On Jan. 27, crypto prices dropped 6.5%, on average. This was due to a sell-off in high risk assets that followed a Chinese AI (artificial intelligence) model which raised concerns over AI profitability.
AI tokens, however, saw a slightly smaller average drop for the day of 5.4%.
According to CryptoSlate, the AI tokens that have had the most negative daily performance are AIOZ Network, Render, and Arweave, which all fell by 10.2%, 9,3% and 9.4% respectively.
Bittensor’s (TAO), on the other hand, has eased this impact by increasing its prices 5.6% in the last 24 hours.
Nvidia and other AI companies’ stocks slumped after news about the Chinese startup DeepSeek’s latest artificial intelligence model surfaced.
You can also find out more about the following: reports pointed out that the new model can perform like high-end large language models (LLMs) that are currently dominating the market, including OpenAI’s ChatGPT, while running on significantly cheaper hardware.
Notably, the performance of AI tokens is usually related to the traditional AI equities market and general industry events like Nvidia’s strong earnings calls, which have boosted their prices in recent months.
Memecoins and real-world assets (RWA) also had relatively softer declines — down an average of 4.9% and 5.3%, respectively.
The “smart contract platform”The category that includes the major cryptos such as Solana(SOL) or Sui(SUI) also experienced slightly smaller drawdowns, of approximately 5.3% for each.
Bitcoin (BTC), and Ethereum (ETH), also experienced losses that were below market average. They fell by 3%, and 4.9% respectively.
Tokens related to liquid staking services, such as Lido (LIDO) and Rocket Pool (RPL), suffered an 11% correction, registering the worst performance out of Artemis’ 22 categories.
In the same time frame, data availability and tokens of the Bitcoin eco-system also experienced two-digit drops.
An opportunity like the ‘Trump Trade’
Aurelie Barré, Principal Research Analyst at Nansen said that the massive sell-off of risk assets is necessary for investors to profit after pricing in significant amounts of positive news.
She said that stocks linked to the AI supply chain, like the Nuclear ETF and crypto markets, have increased by up 20% in the past month. So, the movement currently seen is not indicative of a market shift.
Barthere has added that:
“For AI stocks, the outlook remains bullish for now, highlighted by TSMC’s recent upbeat guidance. However, this optimism must be reinforced by upcoming earnings reports from Nvidia, ASML, and Big Tech in the next few weeks, which will need to beat expectations to sustain the momentum.”
She added that investors could take advantage of this correction to invest in crypto assets with higher beta, such as SOL tokens, since they have seen steeper price drops than BTC.
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