Despite optimistic expectations of an incoming altcoin season driven by more crypto-friendly regulations in 2025, artificial intelligence (AI) cryptocurrencies have lost nearly one-third of their cumulative value. This decline is evident from the data provided by CoinMarketCap, which shows that the cumulative market capitalization of AI cryptocurrencies has decreased over 28% since its peak on December 7.
Decline in Market Capitalization and Trading Volume
The current cumulative market capitalization of AI cryptocurrencies stands at $50.5 billion as of 7:15 a.m. UTC, down from their peak of $70.4 billion recorded on December 7. This decline is not isolated to just the market capitalization; the cumulative trading volume around AI tokens has also experienced a significant drop, falling by nearly 11% in the past month to the current $4.73 billion.
Impact of Wider Crypto Market Downtrend
The near 30% drop in AI-based cryptos occurred during a broader crypto market downtrend, which saw Bitcoin’s (BTC) price experience an over 14% correction from its all-time high of above $108,000 on December 17. This decline in the overall cryptocurrency market is likely to have contributed to the decrease in value of AI cryptocurrencies.
Expectations of an Incoming Altcoin Season
Increasingly more analysts are expecting an incoming altcoin season during 2025, which could see Bitcoin profits flow into smaller cryptocurrencies, including AI tokens. This anticipation is driven by the expectation that investors will take profit from their BTC positions and invest part of these funds into altcoins.
What is Altcoin Season?
Altcoin season, or altseason, tends to benefit from Bitcoin’s declining market dominance. When investors are taking profit from their BTC positions and investing in smaller cryptocurrencies, it often means that the market is shifting towards a more diversified portfolio.
Fractals: A Tool for Predicting Market Trends
Crypto traders use price fractal patterns to identify key support and resistance levels and potential trend reversals based on historical data. Based on fractal patterns shared by popular crypto trader Elja, it appears that the 2025 altcoin season may start during the first quarter of 2025.
Fractal Patterns:
Elja wrote in a December 27 Xpost:
‘A few more weeks before mega altseason…’
Total crypto market cap excluding BTC. 1-month chart. Fractals. Source: Eljaboom
Potential for Ether to Recapture Previous All-Time High
While some analysts foresee an Ethereum (ETH) price rally to $5,000 in the short term, others are predicting an ‘impulse breakout’ to $15,000 by the end of 2025.
Conclusion
The decline in AI cryptocurrency value is a concerning trend for investors. However, the anticipation of an incoming altcoin season and the potential for Ethereum to recapture its previous all-time high offer some hope for recovery. As the market continues to evolve, it will be essential to monitor the developments closely and make informed investment decisions.
Key Takeaways:
- The cumulative market capitalization of AI cryptocurrencies has decreased over 28% since its peak on December 7.
- The decline in trading volume around AI tokens suggests a decrease in trader interest in these assets.
- Analysts are expecting an incoming altcoin season during 2025, which could see Bitcoin profits flow into smaller cryptocurrencies, including AI tokens.
- Fractal patterns shared by Elja suggest that the 2025 altcoin season may start during the first quarter of 2025.