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 exit by the subnet, but others consider that the fall was 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 such as SN3, SN81, and SN39, affirmed its exit today. Its founder, Sam Dare, has accused the Bittensor founder Jacob Steeves of centralized control on what is being sold as a decentralized ecosystem.
Dare characterized the form of governance as “decentralization theatre” where decisions were unilateral and lacked consensus opinion. In a press release, he stated:
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 are said to have been more than 37,000 TAO. It contributed to the selling pressure, driving the 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% in the 24 hours. At press time, the TAO crypto price hovered around $263 on Friday, April 10. The crash comes after reaching highs of over $340 earlier in the session.
Bittensor price chart. Source: TradingView
The downturn was accompanied by a sharp increase in trading activity with volumes increasing over 143%. Such high volumes serve as the evidence of aggressive selling and profit booking.
Technically, analysts had raised the red flag of declining momentum. Popular trader Cheds Trading observed the Bittensor price has fallen below its 200-day moving average, which may lead to a further pullback.
The second critical level under observation is around $250, which is in line with the 50-day moving average. In the meantime, the Relative Strength Index (RSI) has dropped to 41 indicating a weakening bullish energy.
Derivatives data shows a mixed sentiment. TAO futures went down as quickly as possible within various exchanges, indicating a lack of trust by traders in the short-term. Nonetheless, the activity on larger platforms was rather similar, implying ambivalent positioning of participants.
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 wrote, “Short-term negative impact for $TAO, however, I think that this entire move is overstretched and will fade away.”
In a follow-up post, he clarified that he is not exiting his TAO position yet. 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.”