Bittensor (TAO) dropped 20% in a single day after a key AI research group quit the network, accusing co-founder Jacob Steeves of exercising outsized control over the project's governance.
Covenant AI Exit Triggers TAO Sell-Off
The crash followed the departure of Covenant AI, a research group known for building the Covenant-72B decentralized AI model. The entity had been operating on the Bittensor network before publicly alleging that Steeves held too much power over critical decisions.
In its official statement, Covenant AI said emissions to its subnet were suspended, its permissions were revoked, and protocol changes were made without its input. The group described the situation as evidence of centralized governance.
TAO's price briefly sank to $253, its lowest since mid-March, before recovering slightly to around $263.
The token's market capitalization fell to roughly $2.5 billion.
Covenant AI reportedly sold 37,000 TAO worth more than $10 million alongside its departure. Analysts pointed out that sell volume had reached its highest level since December 2024 — a full 24 hours before the news broke.
Despite the sharp decline, some market watchers saw upside.
TAO's Relative Strength Index stood at just 16 at the time of the sell-off. The RSI measures momentum on a scale from 0 to 100, with readings below 30 typically considered oversold territory. A level that low often precedes short-term rebounds.
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TAO's Volatile March-April Swing
The timing made the collapse especially striking. TAO had surged roughly 62% over the preceding 30 days, climbing from sub-$200 levels to above $320 as the broader AI token sector rallied.
That rally was fueled in part by a U.S.-Iran ceasefire that eased geopolitical fears and by Grayscale increasing Bittensor's weight in its AI fund to 43% in late March. The token had cleared a four-month resistance level near $306 just days before the governance crisis erased those gains almost entirely.
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