Whale investors lose $20 million on AI tokens — Case analysis and risk lessons

Source: CritpoTendencia Original Title: AI Whale Lost $20 Million After Token Collapse Original Link:

AI Token Losses for Whale Investors

A cryptocurrency whale investor suffered a heavy blow in the artificial intelligence (AI) token sector, experiencing significant losses in the current bear market. The investor committed $23 million on the Base layer-2 blockchain network. Originally expecting positive returns, the situation turned against expectations, ultimately leading to shocking losses.

According to on-chain data analysis, this wallet’s losses are among the most severe personal investment failures in the past month. Against the backdrop of a sharp decline in the AI token sector, this investor’s $23 million investment now only remains $2.58 million.

Within a few days, the whale investor bought large amounts of various tokens on the Base network. However, this “bottom-fishing” strategy did not yield the expected returns, as these tokens continued to decline.

Ultimately, this AI sector whale investor could not withstand the blow, liquidating all positions and realizing a loss of $20.4 million. The trade ended with an 89% decline, illustrating that even large investors can make mistakes in cryptocurrency trading. This failure has become one of the most serious recent investment failures.

This may be one of the worst investments. A whale/institutional investor spent $23 million on AI proxy tokens on Base and sold everything today for only $2.58 million, resulting in a loss of $20.43 million (-88.77%).

Specific loss distribution: FAI token lost $9.87 million (-92.31%), AIXBT token lost $7.81 million (-83.74%), and other tokens like BOTTO also suffered losses.

Do these liquidations indicate that the AI token sector will continue to decline?

It is currently difficult to determine whether the AI token sector will continue to decline in the medium to long term. However, all signs point to continued downward movement in the short term. The whale investor clearly recognized this and decided to exit their losing positions.

Expectations of rate hikes in Japan have led to another contraction in the cryptocurrency market. In this context, Bitcoin could drop by 20%-30%, which would mean even larger declines for low-market-cap tokens like AI.

It is well known that a decline in Bitcoin often causes a contraction across the entire market. This may be a key factor that prompted this AI sector whale investor to ultimately abandon their “buy low” strategy.

This investor’s losses serve as a lesson in risk management in the cryptocurrency market. Although the initial strategy seemed bold—considering token prices were far below historical levels—the whale investor may have overlooked some critical factors.

Where did this investor go wrong?

Post-hoc analysis is always easier, but clarity diminishes significantly during actual investment decisions. Therefore, it’s not fair to judge the investor’s strategy solely based on this mistake. However, calm retrospective analysis can clearly identify errors made, serving as a learning reference.

This whale investor likely recognized the risks under current conditions. Nonetheless, the Federal Reserve’s continued rate cuts and expectations of monetary easing in 2026, combined with low token prices, led them to believe it was an ideal time to invest. In fact, it did seem like a good timing.

However, a major mistake was the lack of broader market perspective. Failing to anticipate changes in Japanese monetary policy and their impact on arbitrage trading and US stock capital inflows was a key error, though perhaps not the only one.

Another possible mistake was not considering experts’ warnings about a bubble in the innovation sector. The decline in Broadcom and other companies following quarterly earnings reports was a high-probability event, which exacerbated the downward trend of AI tokens.