AI Cryptos Suffer Major Losses, But Analysts Predict 2025 Altcoin Rally Could Revive Market

AI-focused cryptocurrencies have recently experienced a significant downturn, losing nearly a third of their combined market value despite earlier predictions that 2025 could usher in a strong altcoin season fueled by crypto-friendly regulations.

At the time of writing, the total market capitalization of AI tokens was around $50.5 billion, reflecting a decline of more than 28% from their December 7 peak of $70.4 billion. Alongside this drop, the total trading volume for AI cryptocurrencies also fell, dropping almost 11% over the past month to $4.73 billion, signaling waning trader interest.

This 30% decrease in AI crypto values comes amid broader market struggles, as Bitcoin ( BTC ) dropped more than 14% from its record high above $108,000 in mid-December.

Despite these setbacks, many analysts remain hopeful about a potential altcoin rally in 2025. This altcoin season, often triggered by Bitcoin’s decreasing dominance, could see profits from Bitcoin flow into smaller tokens, including those in the AI space.

The anticipated altcoin season may begin in early 2025, according to technical trader Elja, who noted the presence of fractal patterns that suggest a shift in market dynamics. These patterns, used by traders to predict support, resistance, and potential trend reversals, indicate a favorable environment for smaller cryptocurrencies.