AI Crypto Sector Slides on Fears of a Data Center Bubble

Crypto

AI Crypto Sector Slides on Fears of a Data Center Bubble

• AI Agents sector market cap drops 4.85% amid strong trading volume growth.
• FET and VIRTUAL tokens lead declines with notable volatility and high trading activity.
• Overexpansion of AI infrastructure raises valuation and market confidence concerns.

The AI Agents token sector is experiencing a decline, with the total market capitalization falling 4.85% to approximately $4.52 billion. Despite this drop, trading activity remains strong, as 24-hour volume increased 7.85% to about $697 million. The mixed performance among top tokens displays a cautious sentiment as investors assess the implications of quick expansion in artificial intelligence infrastructure.

How Are the Top AI Tokens Performing？

The sectors dip is broad-based. The leading token, Artificial Superintelligence Alliance (FET) has a market cap of $1.59 billion and a token priced at $0.6643. FET has declined by 4.43% over the last 24 hours and by 6.47% over seven days. Its trading volume rose to $98 million, reflecting continued liquidity despite the price drop.

Virtuals Protocol (VIRTUAL), the second-largest project, reports a market cap under $961 million and a token price of $1.46. This token experienced an 8.51% decrease in 24 hours and a 14.46% weekly loss amid a 24-hour trading volume exceeding $187 million, which shows increased volatility relative to peers.

Other notable tokens include ai16z (AI16Z) with a market cap of $163 million and a 24-hour price decline of 3.68%, and OriginTrail (TRAC), holding $156 million in market value with a minor 1.1% daily dip. Smaller projects such as Freysa (FAI) and Phala Network (PHA) report market caps close to $141 million and $78 million, respectively.

Their token prices declined by 1.10% and 3.58% over 24 hours. Additionally, AIXBT and PHA showed positive price movement in the last hour, hinting at limited short-term recovery possibilities.

What Is Driving the Market Concern？

Market observers are pointing to the massive, rapid expansion of AI infrastructure as a key factor affecting valuations.

Armen Panossian, co-CEO of Oaktree Capital Management, likened the surge in AI investments to previous market bubbles, including the 1990s fiber optic boom. He noted excessive capital is flowing into AI data centers without sufficient user demand or long-term contracts, a pattern that historically leads to overcapacity and valuation corrections.

How Does This Affect AI Crypto Tokens？

Panossians warnings highlight a risk that could impact all sectors that rely on AI infrastructure, including a growing number of crypto networks. An overbuilding of data centers could result in a glut of surplus assets, leading to low returns and a broad reduction in market confidence.

Such dynamics could pressure asset prices and trading behavior in AI-linked tokens.