Bittensor retraces 60% from ATH: High-risk entry or catching a falling knife?

Key Takeaways

Why is Bittensor likely to bounce soon?

It was approaching a key technical and psychological support at $300, which has been defended since June.

Shouldn’t traders be wary of buying, given the current market conditions?

Generally, yes, but the long-term range low retest is a low-risk, high-reward setup with clear invalidation levels at $288 and $275, the local supports.

Bittensor [TAO] continued to slide down the price charts as selling pressure remained resolute. Over the past week, TAO has shed 14.8%, compared to Bitcoin’s [BTC] 13.05%.

The volatility around Bittensor has been remarkable.

Since June, TAO has traded within a range that reached from $294 to $470. The beginning of November saw a breakout from the range and a rally as high as $539. Within three weeks, TAO has shed 41%.

Source: Glassnode

The price drawdown from the all-time high metric was nearly 60% once again, and could sink further. This was another way of saying the $300 level, around the current range lows, has been a multi-month support level.

Source: Token Terminal

Another worrying factor was the drop in Bittensor core developers in July and August. Their numbers have not picked up since then.

This, and the recent price action, would both be worrying long-term investors.

Can TAO bulls defend the range lows?

Source: TAO/USDT on TradingView

From a technical perspective, TAO presented a good buying opportunity. It was back at a solid demand zone around $300, one that has been defended since June.

During the retracement of the recent rally to $539, the trading volume has been dwindling.

This suggested that, while sellers are in control, there was a chance that bulls and bears would find equilibrium at the range lows. A few days of consolidation could be followed by an attempt at a rally.

Demand needs to increase to make this a possibility. A potential Bitcoin bounce could quickly shift the sentiment in the altcoin market.

Source: CoinGlass

The liquidation heatmap showed that the nearby sizeable liquidity cluster was at $291-$302.

The lack of liquidity building up underneath showed that we should not expect a sizeable deviation beneath the range lows before a potential bounce.

This meant that a bullish swing trader’s invalidation was the $275 mark. The $288-$302 area was a demand zone to keep an eye on, and the price targets were $383 and $471, the mid-range and range high resistances.

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion