AI Agent Tokens Crash as Smart Money Investors Dump Their Positions

Cryptocurrency investors who piled into AI tokens may now be left holding the bag as prices crash and smart money investors cash out.

Virtuals Protocol (VIRTUAL), among the best-performing cryptocurrencies of 2024, crashed below $3 after shedding 43% from its highest price this year.

Meanwhile, ai16z (AI16Z), the third-largest Solana (SOL) meme coin, crashed by over 50% from its highs in January. Together, the tokens shed more than $2 billion in market capitalization.

While this freefall coincided with the broader crypto crash, a closer look at their on-chain metrics revealed that smart money investors and profit leaders began cashing out their positions.

Ai16z profit leaders cash out their tokens

According to Nansen, the most profitable ai16z trader made over $39 million—this individual essentially sold all of their tokens.

The third-most profitable buyer made $19 million and sold nearly all of his tokens for a large profit.

While most profitable traders still hold their ai16z tokens, many sold the majority of their holdings to cash in their profits.

Another key data point from Nansen showed that smart money investors also dumped their tokens. There are now 80 smart money ai16z investors with 934 million tokens.

Back in December, there were 124 of these investors with over 1.24 billion tokens. Nansen defines smart money investors as those who had a long and successful track record in the crypto industry (Bitcoin was first mined in 2009, marking the first decentralized cryptocurrency).

VIRTUAL price crashes as top holders cash out

A similar cashout occurred for the VIRTUAL token, as most of its profit leaders sold their tokens.

LVT Capital, the most profitable investor with over $5.5 million in profits, sold all of its holdings, generating a 4,082% return on its initial investment.

Many more VIRTUAL investors exited their positions, while smart money investors sold their holdings.

This investor behavior is common in the crypto and stock market industries.

Many retail investors tend to follow the fear of missing out (FOMO) when a token begins to rally parabolically. Early investors cash out, and many are left holding the bag.

A prime example is the recent performance of several top meme coins, such as PNUT, GOAT, Mother Iggy, and Kekius Maximus. As the chart below shows, these tokens initially surged and then crashed as the hype ended.

AI agent tokens have seen a surge in interest in recent months as the hype surrounding artificial intelligence continues to grow.

Several reports indicate that the AI agent industry is poised for further growth in the near future.

One such report estimated that the industry was valued at $5.29 billion in 2024 and is expected to achieve a compound annual growth rate of 40% by 2035.

Virtuals Protocol hosts several hundred projects, including G.A.M.E, which has a market cap of $212 million, aixbt, valued at $411 million, and Luna, with a market cap of $65.2 million.