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AI-focused cryptocurrencies tumble as investor confidence wanes
Major AI-linked tokens plunged more than 20% this week as investor appetite cooled amid fresh concerns over massive AI infrastructure spending by Big Tech. Data from CoinGecko shows Bittensor (TAO), NEAR Protocol (NEAR), Internet Computer (ICP) and Render all suffered steep weekly declines as market participants reassessed the growth and monetization timelines for decentralized AI projects.
Market snapshot and key losses
Bittensor, the largest AI-centric crypto by market capitalization, traded near $164 after sliding roughly 23% over seven days, with a market cap reported at about $1.58 billion. NEAR Protocol fell roughly 25.4% in the same period, while Internet Computer and Render recorded similar double-digit declines. Overall, the combined market capitalization of AI cryptocurrencies plunged by more than 40% on Friday and dropped over 42% within a 24-hour span, bringing the sector’s total valuation to around $12 billion.
Why Big Tech spending is spooking investors
Reports that companies like Alphabet and Amazon plan to dramatically scale AI infrastructure investments in 2026—estimates suggest spending could surge toward $500 billion—have intensified investor scrutiny. The fear is that these huge capital expenditures will widen the time gap between infrastructure deployment and actual monetization. Earnings disclosures highlighting disproportionate infrastructure spend versus near-term profit have amplified doubts about margins and return timelines.
Spillover effects: chips, software, and liquidations
Concerns in equities spilled into crypto markets. Shares of AI-software and hardware providers such as Microsoft, AMD and Nvidia softened—Microsoft was more than 8% lower over five days, while AMD and Nvidia fell about 18.5% and 10%, respectively—putting additional pressure on AI-linked tokens. These public companies supply the GPUs, chips, and cloud services that underpin many decentralized AI projects, so weakness in those stocks tends to reverberate through crypto sentiment.
Leverage, Bitcoin's drop and forced selling
The AI token sell-off coincided with a broader crypto market liquidation event after Bitcoin briefly plunged over 18% on Thursday, dipping toward the $60,000 area. That move triggered roughly $2.6 billion in leveraged liquidations, intensifying risk-off behavior and driving speculative assets lower. When macro and geopolitical concerns compound, risk-on capital flees from higher-beta sectors like AI cryptos.
Why these projects are vulnerable—and what they do
Many AI crypto projects rely on high-performance compute and decentralized infrastructure. Bittensor uses GPU-heavy clusters to support competitive machine-learning model training. NEAR Protocol is built to scale for high-throughput, data-intensive AI applications. Internet Computer offers sovereign cloud infrastructure to host autonomous AI agents, and Render provides decentralized rendering and compute for graphical and AI workloads. That interdependence with hardware and cloud providers links token performance to the broader AI infrastructure narrative.
Outlook and what investors should watch
Near-term pressure on AI cryptos may persist if Big Tech continues its heavy CAPEX cycle without clear profit improvements or if macro risk sentiment remains elevated. Investors should monitor: 1) quarterly spending guidance and earnings of major cloud and chip vendors, 2) Bitcoin price stability and liquidation indicators, 3) on-chain metrics and developer activity for AI-focused protocols, and 4) short-term liquidity and exchange flows for large-cap AI tokens.
While volatility presents downside risk, longer-term fundamentals for decentralized AI—such as demand for distributed compute, open-model training, and sovereign hosting—could support recovery if projects prove product-market fit and reduce dependencies on centralized infrastructure. For now, the market is pricing in uncertainty as capital reallocates toward safer, more liquid assets.
Source: crypto
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