TAO Price Under Pressure: Bitcoin Dominance and Covenant Aftershocks Persist

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TAO, the native token of AI infrastructure builder Bittensor, has lost an additional 7% in value over the past 24 hours, trading at $238.91. 

Just a week ago, the coin traded slightly above $300, but has since dropped by 24.31% due to the recent Covenant drama and investor rotation into alternative coins.

Bittensor (TAO): The fall from glory

On Friday, prominent subnet developer Covenant AI announced its exit from Bittensor and that of its subnets, citing “centralized control.” Within hours, the token had shed over 25% of its value, with massive liquidations of long positions further contributing to the downward cascade. 

It did not help things much that investors were migrating to similar alternative tokens, such as NEAR Protocol’s NEAR.

Other top-performing competitors include Internet Computer (ICP), Render (RENDER), and Artificial Superintelligence Alliance (FET). In the last 24h, the three have posted considerably smaller price drops than TAO, with the largest at 3.35%.

Near-term outlook

Should token dumps persist, TAO could test the recent low of $230. Price stabilization would appear once the token reclaims $260.

Source: Trading View

As debate continues around the ecosystem’s decentralization nature, supporters have noted that the token has yet to crush all investor faith since it remains the top AI token by market cap (ranked 33rd).

Underpinning this narrative is the blockchain’s institutional appeal. In early April, the high-profile asset manager Grayscale increased the amount of its AI fund allotted to Bittensor to 43.06%. The company also filed to convert its Bittensor Trust into a spot ETF.

Even more, Bittensor is increasing its subnet capacity from 128 to 256 this month. This effectively increases the number of AI projects that can build on the network.

That said, the token is yet to recover above its $300 psychological level, which it broke past in March when Nvidia CEO Jensen Huang praised its accomplishments.

Key events to watch for are the network’s response to governance criticism, institutional uptake, and community reaction to upcoming upgrades.