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Cryptocurrency prices declined by 6.5% on average on January 27 due to a significant sell-off in risk assets triggered by concerns regarding AI profitability stemming from a Chinese artificial intelligence (AI) model.
However, AI-related tokens experienced slightly milder average losses for the day at 5.4%.
According to data from CryptoSlate, the AI tokens that performed the worst on a daily basis include AIOZ Network (AIOZ), Render (RENDER), and Arweave (AR), which dropped by 10.2%, 9.3%, and 9.4%, respectively.
Conversely, Bittensor (TAO) mitigated the overall impact with a 5.6% price increase over the last 24 hours.
Shares of Nvidia and other AI companies fell following reports regarding the latest AI model from the Chinese startup DeepSeek.
The reports indicated that the new model can perform comparably to high-end large language models (LLMs) currently leading the market, such as OpenAI’s ChatGPT, while operating on significantly less expensive hardware.
It is noteworthy that the performance of AI tokens is typically linked to the broader AI equities market and significant industry events like Nvidia’s strong earnings calls, which have recently driven their prices higher.
Memecoins and real-world assets (RWA) also experienced relatively smaller declines, decreasing by an average of 4.9% and 5.3%, respectively.
The “smart contract platform” category, which includes major cryptocurrencies like Solana (SOL) and Sui (SUI), also saw slightly lower downturns of around 5.3% each.
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Bitcoin (BTC) and Ethereum (ETH) also faced losses below the market average, dropping by 3% and 4.9% respectively.
Tokens associated with liquid staking services, such as Lido (LIDO) and Rocket Pool (RPL), experienced an 11% correction, marking the worst performance among Artemis’ 22 categories.
Data availability and Bitcoin ecosystem tokens also recorded double-digit declines within the daily timeframe.
A chance similar to the ‘Trump Trade’
Aurelie Barthere, principal research analyst at Nansen, stated that the major sell-off in risk assets was crucial for triggering profit-taking among investors after a substantial amount of positive news had been priced in.
She pointed out that crypto markets and AI supply chain-linked stocks, such as the Nuclear ETF, surged by up to 20% over the past month, indicating that the current movement does not signify a market shift.
Regarding AI stocks, Barthere added:
“For AI stocks, the outlook remains bullish for now, underscored by TSMC’s recent positive guidance. However, this optimism needs to be reinforced by upcoming earnings reports from Nvidia, ASML, and Big Tech in the coming weeks, which must exceed expectations to sustain the momentum.”
She also mentioned that this correction could present an opportunity for investors who missed the Trump crypto trade to enter the markets, particularly in higher-beta crypto tokens like SOL, which have experienced sharper sell-offs compared to BTC.
The post AI tokens impacted by market sell-off but perform better than most appeared first on CryptoSlate.
