After the AI sector encounters a "capital-draining trend," how will the market perform next?

[TL;DR]:

In the crypto world, hot money always flows toward hotspots.
Recently, the TRUMP token launched a capital-draining trend, and the once-popular AI tokens suddenly seemed like relics of the past, experiencing a sharp crash.
Looking ahead to the market in 2025, where will the AI sector go from here?

Introduction

Over the past year, the “Crypto+AI” sector has achieved unprecedented explosive growth. From just a handful of projects at the beginning of last year to an industry now valued at over $40 billion, AI has become an independent sector in the crypto market that cannot be ignored. However, not long ago, the market performance of this sector experienced a setback. The launch of tokens by Donald Trump and his wife triggered a “capital-draining” trend in the crypto market, leading to a sharp decline in the sector’s market cap. According to Gate.io, the AI sector continues to show widespread pullbacks as of this time of writing. This has led some to question whether the rapidly rising AI sector will become a thing of the past.

The AI Sector Faces a Major Pullback

According to data from CoinGecko, the total market cap of AI tokens reached a record high of $54.4 billion at the beginning of 2025. While the market was broadly optimistic about the future and expected the rally to continue into the new year, the launch of the Trump tokens drained liquidity from the market.

The AI Agent sector was practically bleeding out from the data during the week leading up to Trump’s inauguration. Apart from a few mainstream blue-chip projects like AIXBT, ARC, and Griffain, which showed strong support, most small- to mid-cap projects in niche subfields suffered catastrophic losses, with their values being slashed repeatedly.
On Monday, the day of Trump’s inauguration, data from SoSoValue showed that AI Agents continued to decline, with the sector seeing a 24-hour drop of 12.08%. Among the major AI tokens, AI16Z, ARC, AVA, and ACT fell by more than 20%.
In the short term, enthusiasm for the AI Agent narrative has been dampened. As of the time of writing, data from SoSoValue shows that many popular tokens in the AI Agents sector still show significant monthly declines in returns.

It is worth noting that although the “capital-draining” trend triggered by Trump’s inauguration has temporarily subsided, the AI sector has shown signs of recovery. However, the sector is highly polarized: while leading AI Agent tokens have seen substantial gains, most other tokens continue to perform mediocrely.

This demonstrates that even the disruption caused by the Trump family has introduced significant uncertainty to the crypto market’s limited funds. Looking ahead to 2025, will AI still be the main narrative of the year?

Trump Establishes AI Sector’s Market Position

In fact, on Trump’s second day in office, he established AI as the main theme for this year’s market.
On his first full day in office, Trump invited SoftBank CEO Masayoshi Son, OpenAI CEO Sam Altman, and Oracle co-founder Larry Ellison to the White House. At the press conference, Trump announced that SoftBank, OpenAI, and Oracle would jointly establish a new AI company called Stargate, stating: “This is the largest AI infrastructure project in history.”

Reportedly, these companies will initially invest $100 billion in the AI project, with plans to increase the investment to over $500 billion in the future. The investments will include building data centers and physical campuses. Additionally, Microsoft and NVIDIA are also expected to participate. Trump noted that the project is expected to create 100,000 jobs in the United States.

Shortly after his inauguration, Trump swiftly repealed the AI-related restrictions set by the Biden administration and signed a series of measures to promote U.S. energy development to meet the increased electricity demand brought on by the surge in data centers. Over the past two years, the Biden administration had attempted to address AI’s potential risks through policy measures, but Trump’s new policies take an entirely opposite approach. By repealing Biden’s AI executive orders and supporting AI infrastructure development, Trump sent a clear signal: the United States will vigorously promote infrastructure development to accelerate advancements in artificial intelligence.

Furthermore, market analysts have pointed out that the AI Agent narrative will likely remain the main theme 2025. The integration of AI and crypto is not merely a short-term hype cycle; it represents a redemption and reconstruction of outdated crypto narratives through the new productivity brought by AI. Almost all old narrative projects will rejuvenate through AI.

Although the Trump family’s MEME tokens seem to have cooled down the market with a “dimensionality reduction attack,” projects that survive this major crisis and continue to deliver value will likely experience a second spring when the AI Agent market recovers.

Some analysts also believe that this round of pullbacks in the AI sector can be seen as a form of self-purification. AI Agents have almost replicated the old narratives, with many old projects simply rebranding themselves as new focal points, leading to short-term market chaos and preventing the true value of AI Agents’ innovation from being realized. However, after a round of reshuffling, the overall quality of the sector is expected to improve.

How to Buy the Dip as Market Funds Flow Back?

Following the announcement of Trump’s AI plan, data from SoSoValue showed that the AI Agents sector saw a 24-hour increase of 10.47%, with PIPPIN, ARC, and AI16Z rising by 104.82%, 44.63%, and 30.17%, respectively. Additionally, VIRTUAL rose by 11.95%.
Earlier data from Dune Analytics indicated that Virtual Protocol’s daily trading volume had been declining since its peak on January 2, with overall revenue for January dropping by 99%. One key factor behind this was the rise of TRUMP and MELANIA tokens. Over the past week, the Meme sector became the market’s overall focus, draining liquidity from other areas, including the AI Agent market, leading to a 10% drop in AI token market cap on January 20. However, market funds have gradually returned to AI projects as the Meme trend cools and the Stargate project unfolds.

In this context of fund inflows, how should ordinary users buy the dip? Analysts have provided four key criteria for consideration:

（1）Look for leading projects with strong market consensus:
These projects usually have high market visibility, react quickly during market surges, and demonstrate strong liquidity support during downturns. The key is that these projects maintain a certain market cap level even after multiple market fluctuations, making them the preferred choice for large funds. The activation of the entire sector often depends on the performance of these blue-chip projects. Examples include $AIXBT, #ai16z, $arc, #Griffain, #Virtual, $GAME, etc.

（2）Look for projects with unique narratives and ongoing progress in technology and application development:
These projects often have high potential, especially those with high ceilings at the framework and standard levels. However, the challenge lies in gauging their progress, as technological advancements are often slow. If financial manipulation is behind the scenes, ordinary investors may struggle to make clear judgments. That said, projects with clear development teams (Devs) and unique narrative positioning are worth attention. These projects require a long-term perspective, as short-term noise is prevalent, and narratives continue to evolve. In each sub-sector, there is usually one project that dominates the narrative, such as $Focai in the “Chainification” sector, $BUZZ and $NEUR in the DeFai sector, $HYPER and $AVA in the MetAiverse sector, $Dreams in the gaming sector, $SENTAI in the DePIN sector, and $SPORE in the creative gameplay sector.

（3）Look for projects with relatively clear business logic and roadmaps:
Some projects may appear simple on the surface, but their core drivers lie in the growth of operational data. These projects often have low market expectations but relatively solid fundamentals. They are worth watching if they can consistently demonstrate data growth while upgrading operational services. Examples include $FXN, which focuses on a decentralized API-sharing marketplace; $SNAI, which offers a serverless AI Agent development and deployment platform; $YNE, which is dedicated to a decentralized plagiarism-checking platform; and $WAVE, which focuses on one-click deployment platforms for AI automated trading agents.

（4）Look for projects that may bring significant changes to commercial expectations in the future:
As projects strongly tied to the major commercial IP of AI Agents, their development and evolution often have the potential to lead narratives and introduce significant changes. For example, the story of $METAV may not yet be over. If its narrative logic as an AI PumpFun project is realized, its potential will become considerable. Similarly, #DegenAI could quickly close its market cap gap with competitors if its product delivers excellent user experience. Additionally, projects like #Zerebro, which originally had clear commercial paths but underperformed in secondary markets, are worth monitoring for future developments.