AI Tokens Defy Market Downturn as Investors Eye Lesser-Known Digital Assets

• Investors are focusing on lesser-known digital assets as AI tokens post double-digit gains.
• Virtuals Protocol extends its rebound, aiming for a breakout above $2.00, decoupling from the broader crypto sell-off.
• GRASS surges nearly 15%, bolstered by multiple buy signals and potential support above $2.00.

The cryptocurrency market is struggling to maintain its May gains, with a weak sentiment triggering frequent but short-lived sell-offs. However, isolated rallies are emerging in the artificial intelligence (AI) sector, spearheaded by Virtuals Protocol (VITUAL) and Grass (GRASS) tokens. These tokens are aggressively extending their gains, hinting at a potentially bullish weekend.

Market Overview: AI Tokens Surge Against Negative Sentiment

A public dispute between former U.S. President Donald Trump and Tesla CEO Elon Musk has sent ripples through global markets, including the cryptocurrency sector.

Bitcoin plummeted, triggering a cascade of losses across the broader crypto market. The sharp decline resulted in a decrease in total market capitalization.

Aside from the Trump-Musk disagreement, recession fears in the U.S. have resurfaced. Experts have warned of a potential mild recession in the second half of the year, primarily driven by a stock market collapse triggered by tariff-like measures.

Employment data indicated that the labor market continues to improve slowly, remaining near historic lows.

With the Federal Reserve (Fed) meeting scheduled later this month, expectations lean towards no interest rate cuts in the short term, potentially keeping markets subdued longer than anticipated.

This somber outlook may be driving investors towards lesser-known tokens like Virtuals Protocol and Grass, which promise higher growth margins amid increased volatility.

Virtuals Protocol Aims to Break Above $2.00

The price of Virtuals Protocol is up over 12%, trading around $1.85. The AI token, valued, remains above short-term support provided by the 200-period Exponential Moving Average (EMA) on the 4-hour chart at $1.60.

A descending trendline resistance, now turned support, reinforces the bullish control over the token.

A buy signal from the Moving Average Convergence Divergence (MACD) indicator suggests a strong bullish bias in the technical structure. This signal occurred when the blue MACD line crossed above the red signal line, encouraging traders to seek exposure to VIRTUAL.

Traders should consider the possibility of a reversal, especially if the short-term support at the 200-period EMA is breached. Profit-taking and potential resistance at the 50-period EMA around $1.91 and the 100-period EMA at approximately $1.95 could delay the breakout beyond $2.00 or even lead to consolidation.

Grass Gains Momentum Backed by Key Technical Buy Signals

Grass, a decentralized network application that allows users to sell their unused bandwidth, posted double-digit gains of nearly 15%. The token is trading around $2.03, above key moving averages, including the 100-period EMA at $1.95 and the confluence support established by the 50-period EMA and the 200-period EMA at $1.92.

Multiple buy signals reinforce the bullish influence on the token, including the blue MACD line crossing above the signal line on the 4-hour chart. The MACD indicator rises above the zero line (0.00), and green histogram bars extend above it, indicating a continuation of the uptrend.

The second buy signal from the SuperTrend indicator, sent, indicates that bulls have the upper hand. This trend-following tool uses Average True Range (ATR) readings to measure market volatility.

Traders can use the tool as a dynamic support and resistance indicator, with the buy signal flashing whenever the price crosses above the SuperTrend line, changing color from red to green.

Still, the Relative Strength Index (RSI) shows signs of weakness at 63 after failing to reach the overbought region.

A reversal towards the midline of 50 implies a lack of conviction in the uptrend, possibly due to potential profit-taking and shifting market dynamics. Therefore, a potential loss of support at $2.00 could lead traders to adjust to key support levels, including the 50-period EMA and the confluence support at $1.92.

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