Bittensor shorts in trouble: Will the $500 level trigger a TAO bounce?

• Bittensor has seen a 20% increase this month.
• Traders have been anticipating a bounce from the $500 zone.

Bittensor [TAO] has gained significant attention as one of the top AI coins poised for long-term growth.

Despite a 10% decline over the past week, the token has seen a 20% increase this month, indicating a bullish outlook over longer timeframes.

TAO recently broke out of an inverted head and shoulders pattern, piercing past the $600 level, but has since entered a consolidation phase.

Exit of shorts to trigger a bounce

Many traders mistakenly believed this signaled the end of the bullish trend, although no clear structural break had occurred on higher timeframes.

This led to a large number of short positions entering the market, expecting further price declines. However, TAO’s has price surged after this pattern, trapping these shorts.

The price has since returned to their breakeven level, which often serves as a psychological zone where trapped traders look to exit. This could lead to a potential bounce if more shorts exit their positions.

Source: Hyblock Capital

At press time, TAO was trading around $560, below this psychological level. A further decline toward the $500 zone may trigger a rebound towards $600 and higher, provided market conditions improve.

After a recent correction, TAO seemed to be in vertical accumulation, indicating the possibility of a potential bounce on the 45-minute timeframe. The token’s pullback to the $500 range is seen as a short-term buying opportunity.

A strong bullish convergence on the 4-hour chart suggested a price pump was likely, with a minimum target of $800 by 2025.

Source: TradingView

However, traders are cautious, as the MACD indicator showed some weakness, meaning if TAO loses support, prices could briefly dip below $500 again.

TAO among top AI projects

Bittensor’s long-term outlook remains positive, but traders should keep a close eye on key levels for potential gains.

Despite the recent pullback, TAO remains one of the top projects in the AI ecosystem, further supporting its bullish potential.

The token ranks among the top 5 AI and Big Data projects by development, alongside other prominent players like Near Protocol [NEAR], Oasis [ROSE], and The Graph [GRT].

Source: Santiment

Read Bittensor’s [TAO] Price Prediction 2024–2025

Bittensor’s inclusion in this list highlights its strong position in the market, making it well-positioned to bounce back from the $500 level.

Traders should keep an eye on key price levels and market developments, as Bittensor is likely to experience further gains in the coming months.