AI coins are struggling, but will the collapse of AI16Z trigger a new wave?

Key points

AI coins have struggled in the last 24 hours, with AI16Z leading the way. Liquidity is below recent price movements, which may lead to further declines, but buyers are accumulating.

The entire cryptocurrency market is declining, but as investors withdraw funds from the sector, AI-focused tokens are the first to suffer sell-offs.

The hype surrounding AI projects based on Solana [SOL] is rapidly fading, with bearish sentiment accelerating the decline.

As of the time of writing, the total market capitalization of AI coins has fallen to $30.7 billion, with a daily drop of 3%.

Data from CoinMarketCap shows that trading volume has also plummeted, down 15%. Even larger market cap AI tokens have not been spared, suffering similar losses.

A noteworthy example is ai16Z [AI16Z], which has dropped 10% at the time of writing. Despite the significant decline, its price hovers near a potentially favorable support zone, suggesting a possible rebound opportunity.


AI16Z is at a crossroads: breakout or collapse?


The price of AI16Z has been in a triangular pattern since early April. Since the peak on May 12, the price has repeatedly failed to break above the sloping resistance.

The price once dipped below the super trend indicator, but as the pattern approaches a breakout, a price reversal may occur. The AI coin is currently in a zone that surged about 300% in just one month.

Otherwise, falling below $0.10 may trigger further sell-offs. Sentiment around AI16Z is mixed, as price movements appear bearish, but on-chain indicators are changing.



Looking at the liquidation heatmap, the liquidity level formed by AI16Z below $0.10 is deeper than any other level.

The main level is $0.99. This suggests that since prices tend to follow liquidity, the likelihood of further declines is high.

Some traders may close short positions slightly below $0.10, while others may buy long positions. This could trigger a reversal. If more long positions are closed, it might lead to a larger decline.



On the other hand, the liquidation cluster is building at the $0.116 level. The importance of $0.10 is supported by on-chain activity at this level.

As buyers increase, whale orders surge.

From the on-chain data of AI16Z, since the end of June, spot and futures traders' CVD has been buyer-dominant. Meanwhile, this altcoin has maintained a neutral stance since February, indicating that the market is in a consolidation phase.

The new 90-day volume increment indicates that despite the significant drop, sentiment has started to shift.



Additionally, whenever the trading price of AI16Z reaches or falls below $0.10 (CryptoQuant data), whale orders also surge. This indicates the presence of an accumulation zone.

Retail activity is slow; they always arrive late.

Overall, on-chain signals may suggest a potential reversal for AI16Z. However, traders need to pay attention to the direction of the breakout to determine the timing for entry.