The artificial intelligence (AI) agents crypto sector is facing continued losses, with its total market capitalization dipping below $5 billion amid a broader decline. 

The ongoing slump has raised concerns about the sector’s stability, sparking debate regarding its long-term potential. 

AI Agents Face Major Market Slump

This downturn follows a period of rapid growth. The majority of the top AI agent tokens saw substantial gains, peaking between December and January. Nonetheless, that momentum has now reversed.

The decline has affected nearly all AI tokens, with most following a similar trajectory in the crypto market. 

“The sector has declined 77.5% from its peak,” Whale Insider posted on X.

According to the latest data, the sector suffered a 6.8% loss in the past 24 hours alone, bringing its total market capitalization down to $4.4 billion. Additionally, all of the top 10 AI tokens have recorded double-digit losses over the past week, signaling a widespread correction.

Further insights from Cookie Fun reveal that the downturn is spread across multiple blockchains. Solana’s (SOL) AI Agents sector has seen a 4.3% decline over the past day. Its market capitalization stood at $1.1 billion.

Similarly, Base’s AI sector has dropped to $736.6 million, marking a 5.8% loss over the same period.

Other blockchain networks hosting AI-related tokens have been hit even harder, with their collective market cap shrinking to $722.2 million, down a staggering 15.2% in the last 24 hours. 

The Future of AI Agents: Still a Game-Changer?

While the sector’s sharp decline has raised concerns about its long-term viability, Guy Turner, founder of Coin Bureau, argues that it is still too early to dismiss the potential of AI Agents.

“With the right catalyst, not only could it recover, but it could even surge to new heights,” Turner said.

He believes AI Agents could see renewed interest as AI technology advances, drawing fresh adoption. Turner pointed to retail engagement, regulatory clarity, and institutional investment as key growth drivers. 

According to him, support from governments, tech firms, and financial institutions could legitimize the sector, shifting it from speculation to a major market force.

That’s not all. Turner also acknowledged the possibility of a meme coin resurgence acting as a short-term catalyst. While AI Agent tokens are sometimes dismissed as “meme coins with a chatbot attached,” he believes this perception oversimplifies their true potential. 

“AI agents are clearly a disruptive force, and we don’t yet know exactly how much value they can provide but you can bet your bottom dollar that tech companies everywhere are going to do whatever it takes to find out,” he added.

The US Department of Housing and Urban Development (HUD) manages billions of dollars in aid and insures over a trillion dollars in mortgages. Now, it is considering using blockchain to track grant recipients’ spending.

The agency may also explore stablecoins as a financial tool within its system. However, this proposal has sparked intense debate, especially as HUD faces challenges in financial management efficiency.

HUD’s Crypto Consideration Raises Concerns of a 2008-2009 Crisis Repeat

According to ProPublica, HUD is looking to leverage blockchain—the core technology behind cryptocurrencies—to improve oversight of grant funds.

A HUD official stated that the idea of using blockchain and stablecoins is being driven by Irving Dennis, the agency’s Deputy Chief Financial Officer. Dennis, who previously worked as a partner at the global consulting firm EY, believes the technology could enhance transparency and efficiency in grant monitoring. This area has historically been complex and prone to waste.

Additionally, ProPublica reported that HUD officials held at least two meetings last month to discuss the blockchain proposal. Staff from the Office of the Chief Financial Officer (CFO) and the Office of Community Planning and Development (CPD) attended these meetings.

During the discussions, CPD explored a “proof of concept” pilot project. In this project, blockchain would track funding for a CPD grant recipient.

“We might learn something from this, especially if the federal government is moving toward stablecoin adoption in the future,” one official who attended the meeting said.

However, ProPublica quoted a HUD employee expressing concerns: “People are trying to introduce another unregulated security into the housing market as if 2008 and 2009 never happened.” Another official compared cryptocurrency to “Monopoly money,” implying it could become worthless.

D.O.G.E. Highlights Internal Financial Issues at HUD

Recently, the Department of Government Efficiency (D.O.G.E.) shed light on internal financial problems at HUD, raising doubts about the agency’s ability to manage new technology. D.O.G.E. revealed that HUD had just completed a software license audit, uncovering severe waste.

“HUD completed the same audit. Initial findings on paid software licenses: 35,855 ServiceNow licenses across three products; only using 84. 11,020 Acrobat licenses with zero users. 1,776 Cognos licenses; only using 325. 800 WestLaw Classic licenses; only using 216. 10,000 Java licenses; only using 400. All are being fixed,” D.O.G.E. stated.

HUD’s official press account responded to D.O.G.E.’s findings, saying the agency is reviewing every dollar spent and working closely with D.O.G.E. to address taxpayer money waste.

As of this writing, HUD’s official X account has not made any announcements regarding blockchain trial discussions.

XRP has maintained a downtrend since reaching an all-time high of $3.40 on January 16. It currently trades at $2.18, noting a 35% price drop over the past two months.

The double-digit dip has led to a decrease in the amount of XRP tokens held in profit. On-chain data shows that the bearish sentiment against the altcoin is climbing, hinting at an extended decline. 

XRP Sees Drop in New Demand, Signaling Market Interest Slowdown

As XRP’s price falls, its total supply in profit has also reduced. According to Santiment, this has shrunk by 6.39 billion over the past week to fall to its year-to-date low. 

As of this writing, 87.95 billion tokens out of a total supply of 99.98 billion are held at a profit. This signals that some investors are now holding XRP at a loss, reflecting increased selling pressure and weakening market sentiment.

Moreover, on-chain data also shows a slump in new demand, with daily fresh purchases of XRP seeing a notable drop this month. Per Santiment, only 4,516 new wallet addresses were created on Sunday to trade XRP.

This represented the lowest daily count of new XRP demand since the beginning of the year. 

When an asset sees a drop in new demand, it means fewer investors are buying it. As observed with XRP, this has reduced trading activity and weakened price support in its spot market. It signals waning market interest in the altcoin and can contribute to further price declines if selling pressure remains high.

XRP Faces Selling Pressure: Will Bulls Break the Downtrend?

On the daily chart, XRP has traded below a descending trend line since reaching its all-time high, reflecting the downward trend.

This bearish pattern is formed when an asset’s price consistently creates lower highs over time. It suggests that sellers are in control, and unless the price breaks above the trend line, further declines are likely.

XRP trades at $2.17 at press time, significantly below this descending trendline. With a growing bearish bias, the token’s price might fall further from this trendline. In that scenario, XRP’s value could drop below $2 to $1.47.

However, if buying pressure gains momentum, XRP could break above its descending trendline and climb to $2.93.