The Sharp Selloff in AI Tokens: Why Bubble Concerns Are Mounting in Crypto

The artificial intelligence token sector is facing a severe correction, with major AI-focused digital assets plummeting 24.9% in just the past month and experiencing a devastating 74.6% decline over the past year. This bloodbath reflects growing skepticism about whether current valuations are justified, raising legitimate bubble crypto questions that investors can no longer ignore.

When Market Sentiment Turns Ugly

The Fear and Greed Index has shifted decisively into fearful territory, signaling that risk appetite is evaporating fast. A broader look at altcoins reveals the damage is widespread—the sector has contracted by 34% collectively, demonstrating this isn’t isolated to a few projects. Even specific initiatives like Sleepless AI (AI) tell the story: the token is down 0.44% over 30 days and has cratered 94.04% year-to-date, exemplifying how severely investor enthusiasm has cooled.

The Crypto Market at a Crossroads

With the overall cryptocurrency market cap hovering at $1.16 trillion, the sector faces a peculiar contradiction. Equity markets continue climbing despite weakening labor data, creating a disconnect that’s raising eyebrows among analysts. This divergence is fueling anxiety—are we witnessing a genuine market correction, or are we sitting in a bubble crypto that’s about to pop?

What It Means for Your Portfolio

The combination of weak macro signals and deteriorating sentiment has created a hazardous environment for AI tokens specifically. Investors accustomed to explosive gains are now grappling with the reality that many valuations were unsustainable. The intensity of the selloff suggests this bubble crypto moment may force a genuine reckoning about which AI projects have legitimate utility and which don’t.

The message is clear: caution has replaced euphoria, and until sentiment stabilizes, expect continued volatility in this space.