Bittensor Price Crashed 20%, Will TAO Crypto Bounce Back?

Key Insights:

• Bittensor dropped by almost one-fifth as Covenant AI pulled out of the network and sold TAO tokens.
• Sam Dare charged Jacob Steeves with centralized control, terming governance to be a decentralization theatre.
• Analysts attribute the Bittensor price crash to panic selling and a massive subnet exit, but others consider the fall a short-term shock.

Bittensor’s native token, TAO, sharply corrected on April 10, falling by almost 20% in a few hours. The Bittensor price ended up erasing a major part of its recent 100% profits.

The abrupt decline followed a big player in the ecosystem, Covenant AI, declaring a total exit. Its decision caused concerns around regulation and decentralization within the network.

Covenant AI Exit Spurs Bittensor Price Decline

Covenant AI, which operated a number of high-emission subnets, including SN3, SN81, and SN39, affirmed its exit today. Its founder, Sam Dare, has accused the Bittensor founder, Jacob Steeves, of centralized control over what is being sold as a decentralized ecosystem.

Dare characterized the form of governance as “decentralization theatre” where decisions were unilateral and lacked consensus. In a press release, he stated:

“Jacob Steeves maintains effective control over the triumvirate, resists any meaningful transfer of authority, and deploys changes unilaterally whenever he chooses, without process and without consensus.”

Covenant also alleged that its subnets were subject to disciplinary measures. The crackdown includes suspending emissions, revoking moderation rights, and depreciation. The company further claimed huge token deals by insiders, which compounded market fears.

Dare, in an ultimate gesture, sold off his holdings, which were said to exceed 37,000 TAO. It contributed to selling pressure, driving Bittensor price down after TAO soared over 100% last month.

Technical Analysis of Bittensor Price and Market Reaction

After the announcement, Bittensor price fell approximately 20% within a 24-hour span. When writing, TAO crypto price hovered around $263. The crash came after the token reached highs of over $340 earlier in the session.

The downturn was accompanied by a sharp increase in trading activity, with volumes increasing by over 143%. Such high volumes indicate aggressive selling and profit-taking.

Technically, analysts had raised the red flag of declining momentum. Popular trader Cheds Trading observed that Bittensor price has fallen below its 200-day moving average, which may lead to a further pullback.

The second critical level under observation was around $250, which was in line with the 50-day moving average. In the meantime, the Relative Strength Index (RSI) dropped to 41, indicating a weakening bullish energy.

Derivatives data showed a mixed sentiment. TAO futures fell quickly across various exchanges, indicating traders’ lack of trust in the short term. Nonetheless, the activity on larger platforms was rather similar, implying an ambivalent positioning of participants.

A Renowned Analyst Expects TAO Price to Rebound

Crypto analyst Michaël van de Poppe described the Bittensor price trend as negative in the short-term but not fundamentally weak. “Very poor news in the $TAO ecosystem, as one of the largest subnets has decided to rugpull their own token and leave the ecosystem,” Poppe wrote.

He added that such events highlight both “the upside and downside of permissionless ecosystems.” Despite the fallout, he implied that the reaction might be over the top. He stated that the short-term negative impact on $TAO. However, the analyst thought this entire move seemed overstretched, and it could fade away.

In a follow-up post, he clarified that he is not yet leaving his TAO position. He attributed the Bittensor price fall to a mixture of mass selling and investor panic. Sharing a bullish outlook, he said, “I might be looking to be allocating some more capital into $TAO at these levels.”