Overview
Bittensor’s TAO token plunged roughly 30% from its weekly high to about $249 after Covenant AI, a prominent subnet operator, announced it was leaving the ecosystem and called Bittensor a “decentralized theater.” That accusation struck at Bittensor’s decentralization narrative and raised concerns that other builders could depart, reducing network activity and demand for TAO.
What happened in the market
– Price impact: TAO fell ~30% from the weekly peak to near $249 following Covenant AI’s public exit.
– Volume and liquidations: Spot trading volume jumped roughly 250%, signaling strong selling pressure. In futures markets about $11.83 million in positions were liquidated, with $9.71 million of those being long positions, which amplified forced selling.
Technical outlook
Several technical patterns point to the possibility of further downside:
– Earlier signals: A prior analysis warned of a potential ~40% selloff after a golden cross between the 20-day and 200-day EMAs produced bearish follow-through.
– Immediate targets: TAO was moving toward a bearish target near $200, which would imply roughly 25% additional downside from the then-current levels.
– Fibonacci structure: The token is consolidating between the 0.382 and 0.5 Fibonacci retracement levels — a range that historically has preceded deeper corrections for TAO. Past examples: in November 2025 a breakdown from this zone led to a >30% decline down to the 1.0 Fib level, completely retracing the prior rally; in June 2025 a different breakdown saw TAO find support near the 0.618 Fib before rebounding.
Scenario and levels to watch
If the current pattern follows history, TAO could first drop toward the 0.618 Fib level near $230. Continued bearish pressure could push the token further toward the 1.0 Fib near $144 — roughly a 45% decline from the price cited after the Covenant AI exit. Key levels:
– Short-term support: ~$230 (0.618 Fib)
– Bearish target: ~$200 (technical bearish target noted)
– Deeper risk: ~$144 (1.0 Fib, ~45% down from ~$249)
Takeaway
Covenant AI’s exit and its centralization allegation triggered a sharp selloff and elevated liquidations. Technical patterns and historical Fib breakdowns suggest a meaningful risk of further declines, potentially in the 25%–45% range, if sellers persist and network fundamentals weaken.
Risk disclosure
This rewrite is for informational purposes only and is not investment advice or a recommendation. All trading and investing carry risk. Readers should perform their own research and consider consulting a financial professional before acting. The writer and publisher make no guarantees about the accuracy or completeness of the information and are not liable for losses arising from its use.