The post Are bubble fears warranted as AI tokens slide deeper after a ‘key divergence?’ appeared on BitcoinEthereumNews.com.

Altcoins have trended lower lately as market liquidity gradually dried up. This downturn has affected different segments unevenly, with the Artificial Intelligence (AI) sector recording one of its steepest losses so far. This move could mark the early phase of a broader market decline as investors reassess risk ahead of the close of the 2025 trading year. Is an AI bubble building? Concerns are growing across the market that artificial intelligence tokens and stocks may be forming a bubble, driven largely by rising unemployment risks. Employment data has historically shown a close relationship with U.S equities, particularly macro assets such as the S&P 500 Index. Rising employment has typically supported these assets, while employment declines have often coincided with market weakness. Insights from Alphractal recently revealed a growing divergence between employment data and equity performance. In fact, while employment participation stood at 59.4% at press time, a sharp drop from its October 1999 peak of 64.6%, the S&P 500 has continued to climb, posting year-to-date gains of 17.81%. Source: Alphractal Alphractal attributed this divergence to the sustained outperformance of AI-driven assets, which have continued to push equity markets higher despite deteriorating labour conditions. “What makes the current environment clearer is that these critical labor metrics continue to deteriorate despite the ongoing divergence: fewer formal jobs alongside an S&P 500 increasingly driven by artificial intelligence, a sector that generates relatively few formal jobs.” The firm also noted that while markets have entered a bearish phase, press time conditions resemble those seen during previous market bubbles. However, the timeline for a full correction remains uncertain so far. It concluded by suggesting, “It is likely that by 2026, a major signal of weakness may emerge, and many analysts may characterize it as a potential AI bubble.” AI tokens take a hit The latest…

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Filed under: News - @ December 27, 2025 3:08 am