AI agents crash hardest : most altcoins 80-90% down YTD

AI-focused crypto projects, which surged in late 2024, are experiencing steep declines as the market corrects. Data shows that Virtuals Protocol (VIRTUAL) and ai16z (AI16Z) have suffered losses of over 80% YTD, with 40-50% drop in last 7d, with other AI agent-related tokens following suit.

Steep Declines Across AI Agent Crypto Projects

Virtuals Protocol, which previously saw strong adoption in AI-powered metaverse applications, now trades at $0.64, down 83.69% this year. ai16z, a Solana-based AI-powered trading protocol, has also dropped significantly, losing 54.04% in the past 7 days, bringing its price down to $0.19.

Other AI agent projects, including AIXBT, Phala Network (PHA), and AI Rig Complex (ARC), are also down by over 70% in 2025, signaling a broader trend in the sector. The decline follows months of price appreciation fueled by AI hype and institutional interest in artificial intelligence-powered blockchain applications.

Market Correction or Bubble Burst?

The AI crypto sector exploded in 2024 as investors poured funds into projects promising blockchain-based AI solutions. Virtuals Protocol and ai16z both saw rapid gains, with Virtuals previously trading above $5 and ai16z reaching an all-time high of $2.48 in early 2025. However, the current sell-off suggests a potential cooling-off period for the sector, possibly driven by profit-taking and reduced speculative interest.

Phala Network, which focuses on decentralized secure cloud computing, saw more modest growth compared to Virtuals and ai16z, yet it has still dropped 25.79% this week. Similarly, Aixbt by Virtuals (AIXBT), an AI-driven market intelligence token, is down 50.60% over the same period.

Institutional Adoption vs. Market Volatility

Despite the price crash, some industry leaders remain optimistic about AI agents in crypto. The Artificial Superintelligence Alliance (ASI)—a merger of Fetch.ai, SingularityNET, and Ocean Protocol—remains a key player in the space. ASI saw less severe price fluctuations than other AI tokens, indicating possible long-term stability.

AI Agents seem to have suffered the most simply due to the fact that they benefitted the most due to altcoin volatility.

What It Means For You [NFA]

The sharp decline in AI agent crypto projects highlights the risks of investing in high-volatility narratives. Many of these tokens saw exponential gains in late 2024, only to experience deep corrections in early 2025. If you’re holding or considering investing in AI-focused crypto assets, here’s what to keep in mind:

• Short-Term Volatility is High – The rapid rise and fall of Virtuals Protocol, ai16z, and other AI agent tokens show that market sentiment can shift extremely quickly. Timing entries and exits is crucial in speculative sectors like this.
• AI Narrative May Not Be Over – While prices are crashing, the long-term potential of AI-driven blockchain applications remains strong. Projects building real utility could recover once the hype settles.
• Take Profit When Possible – If you held AI agent tokens during the surge, locking in profits at key levels could have helped manage risk. Consider having an exit strategy for future market cycles.
• Diversification Matters – Relying too heavily on one sector—especially a highly speculative one—can lead to heavy losses. A balanced portfolio helps manage risk in volatile markets.

This price action serves as a reminder to approach hype-driven sectors with caution. AI in crypto remains a promising space, but distinguishing between long-term innovation and short-term speculation is key. Always do your own research (DYOR) and never invest more than you can afford to lose.

Community Reaction

Even though communities of these projects still seemed to be pushing and supporting the projects, some disgruntled followers could be seen here and there.

Virtuals protocol’s buyback program was met with skepticism over the real intention. Freyas AI ‘s website also was called into question, apparently being unavailable for 4 days on a stretch.

• Crypto Orc: “Buyback program? Sounds suspiciously like someone’s trying to prop up a sinking ship. Or maybe they’re just feeling generous. Either way, I’m watching.”
• Drew from ArchID: “Please fix your site, follows have been broken for 4+ days now”.