Headline: AI tokens look vulnerable as liquidity dries up and labour data diverges from markets
AI-focused crypto tokens could be headed for a sharp pullback in the coming weeks, as fading market liquidity and weakening macro signals combine to sap investor confidence.
Why this matters
- Altcoins have been drifting lower as liquidity thins, with the AI sector among the hardest hit. That underperformance may be the early stage of a wider market repricing as investors reassess risk ahead of the 2025 trading-year close.
- Analysts are increasingly warning that AI stocks and tokens could be forming a speculative bubble — a concern amplified by weakening labour-market metrics.
What the data shows
- Alphractal highlights a growing divergence between employment measures and equity gains: labour-force participation stood at 59.4% at press time, down sharply from the October 1999 peak of 64.6%, while the S&P 500 has posted year-to-date gains of 17.81%.
- Alphractal says this gap is largely driven by outsized returns in AI-driven assets, which “generate relatively few formal jobs,” allowing equities to climb even as key labour metrics deteriorate. The firm warns market conditions resemble past bubble phases and suggests a major sign of weakness could emerge by 2026, potentially labeled an “AI bubble.”
- Historical links between equities and crypto remain intact. Curvo’s analysis (2011–2024, using Bitcoin as a benchmark) shows S&P rallies typically coincide with stronger Bitcoin gains and that downturns tend to hit both markets.
- Recent token performance: Artemis reports AI tokens plunged 24.9% over the past month and are down 74.6% year-to-date.
- Market breadth and volume are weakening: trading volume has fallen about 20% to $3.48 billion, a combo of declining price and volume that commonly signals eroding investor conviction.
- Altcoins overall are off ~34%, with total market capitalisation down to $1.16 trillion from a $1.77 trillion peak. If negative momentum continues, analysts say the market could revisit the $1 trillion level last seen on 22 April 2025.
Implications
- If AI equities continue to slide, pressure on AI tokens could deepen given the tight correlation between the two markets.
- Broader U.S. economic underperformance — and consequent reduced flows into risk assets — would likely exacerbate altcoin weakness and force further reallocation away from speculative sectors.
Outlook
- Short-term momentum is weak and liquidity has thinned, so downside risk for AI tokens is elevated. Timing for a full correction is uncertain, but several analysts flag 2026 as a potential inflection point if labour and earnings trends continue to diverge from asset prices.
Disclaimer: Content is informational and not investment advice. Cryptocurrency trading carries high risk; readers should perform their own research before making investment decisions. © 2025 AMBCrypto
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