TAO, the native token of AI infrastructure builder Bittensor, has seen a 7% decline in value over the last 24 hours, now trading at $238.91.
Just a week ago, the coin was trading above $300, but it has since dropped by 24.31% due to recent Covenant drama and investor rotation towards alternative coins.
Bittensor (TAO): The fall from glory
On Friday, Covenant AI, a prominent subnet developer, announced its departure from Bittensor and its subnets, citing “centralized control.” This led to a rapid 25% drop in the token’s value, with significant liquidations of long positions exacerbating the downward trend.
Investors also shifted their focus to alternative tokens like NEAR Protocol’s NEAR, as well as other competitors such as Internet Computer (ICP), Render (RENDER), and Artificial Superintelligence Alliance (FET), all of which experienced smaller price drops compared to TAO.
Near-term outlook
If the trend of token dumps continues, TAO could test the recent low of $230, with a potential price stabilization once it surpasses $260.
Source: Trading View
Despite ongoing debates about decentralization within the ecosystem, supporters highlight that TAO remains the top AI token by market cap (ranked 33rd) and has garnered institutional interest.
In early April, asset manager Grayscale increased its allocation to Bittensor in its AI fund to 43.06% and filed to convert its Bittensor Trust into a spot ETF. Additionally, Bittensor is expanding its subnet capacity from 128 to 256 this month, allowing more AI projects to leverage the network.
However, the token has yet to reclaim its previous high of $300, a level it surpassed in March following praise from Nvidia CEO Jensen Huang.
Key factors to monitor include the network’s response to governance concerns, institutional adoption, and community reactions to upcoming upgrades.
