Bittensor’s TAO token may fall as much as 45% in the coming weeks after Covenant AI, a major subnet operator, publicly announced its exit from the ecosystem.
Key takeaways:
– Covenant AI accused Bittensor of being centralized, triggering a roughly 30% drop in TAO.
– Technical fractals suggest a further 25%–45% downside is possible.
TAO down 30% from weekly high
TAO fell about 30% from its weekly high to roughly $249 after Covenant AI labeled Bittensor a “decentralized theater.” The allegation undermined Bittensor’s core narrative of an open AI network with fairly competing subnets, prompting concern that builders might leave and network activity — and TAO demand — could weaken.
The selloff saw trading volume surge about 250%, signaling strong bearish conviction. In futures, roughly $11.83 million of positions were liquidated, with $9.71 million of that being long positions, adding forced selling pressure.
TAO fractals hint at another 25%–45% selloff next
Technicals had already flagged downside risks: a prior analysis noted a potential ~40% selloff after a golden cross between the 20-day and 200-day EMAs. By Friday, TAO was moving toward the bearish target near $200, implying about 25% more downside from then-current levels.
TAO is consolidating inside the 0.382–0.5 Fibonacci retracement range, a zone that historically has preceded deeper corrections for the token. In November 2025, a breakdown from this range led to a >30% drop toward the 1.0 Fib level, fully retracing the prior rally. A June 2025 breakdown saw TAO stabilize near the 0.618 Fib before rebounding.
If the current pattern repeats, TAO could first decline toward the 0.618 Fib near $230. Ongoing bearish fundamentals could push it toward the 1.0 Fib near $144 — about a 45% decline from the then-current price.
This article is produced in accordance with Cointelegraph’s Editorial Policy and is for informational purposes only. It does not constitute investment advice or recommendations. All investments and trades carry risk; readers should conduct independent research before making decisions. Cointelegraph makes no guarantees about the accuracy or completeness of the information and will not be liable for any loss arising from reliance on this content.
