TAO Plummets by 18%: Simple Correction or Warning Sign?
On April 10, 2026, the native token of Bittensor endured one of its worst recent trading sessions, shedding over 18% in just a few hours. Behind this brutal move lies a governance crisis that questions the very nature of the project.
Covenant AI, one of the most influential subnet operators in the Bittensor ecosystem, announced its dramatic departure from the protocol. Its founder, Sam Dare, publicly called out Jacob Steeves, cocreator of the network, accusing him of exercising centralized control over an infrastructure that claims to be decentralized.
This kind of friction is not insignificant. Covenant AI accounted for a significant share of the network’s emission, giving it real weight within the ecosystem. When a player of this magnitude jumps ship and slams the door, the signal sent to the market is clear: something is wrong internally.
The Market Reaction
The drop was immediate and violent. TAO plunged from its recent highs to trade in a range between $283 and $323, settling around a median zone of $303. This move wiped out a nearly 100% gain accumulated over the previous weeks in one fell swoop.
Volume exploded in the red, long positions were liquidated in a cascade, and overall sentiment shifted to panic. On the derivatives markets, funding rates turned negative, signaling that shorts have taken control in the short term. To understand these mechanics, our guide on crypto liquidations details how this type of cascade is triggered.
On the weekly timeframe, the bullish structure that had held for several months has just been invalidated. The RSI dropped below 40, the MACD shows a clear bearish crossover, and the price broke through several intermediate support levels without finding a convincing bounce. Our article on the RSI indicator and the one on the MACD provide a better understanding of these technical signals.
The $250 level is the consensus among analysts as the next major support zone. It acts as both a technical support and a strong psychological threshold. If sellers break through this floor, the next targets lie between $173 and $200, a zone that would correspond to a deep retracement of the last bullish impulse. To further understand how to read supports and resistances, technical analysis tools remain essential.
A bounce is only possible if the price manages to quickly reclaim its lost levels and print a solid weekly close above $340. Without that, the bias remains bearish.
What This Crisis Reveals About Bittensor
Beyond the technicals, it is the question of the protocol’s actual decentralization that is being raised. Bittensor presents itself as a decentralized artificial intelligence network, allowing independent subnets to compete for TAO emissions. The promise is strong, but Dare’s accusations highlight a structural problem: if the founder retains enough leverage to influence network decisions, decentralization remains partly theoretical.
This is not the first time a high potential Web3 project has faced this kind of tension between an ambitious technical vision and governance reality. In this industry, trust is built slowly and destroyed quickly. smart contracts and onchain governance mechanisms are precisely meant to prevent this type of drift, but their effectiveness always depends on the founders’ willingness to truly submit to them.
Our Take on the Situation
The fall of TAO is severe, but it is not necessarily definitive. What is playing out here goes beyond a simple market correction: it is the project’s credibility regarding its fundamental promise that is at stake.
The Bittensor team will need to respond publicly and clearly to the accusations made. Silence or vague communication would only worsen the distrust. Conversely, a structured statement accompanied by concrete commitments on governance could quickly stabilize the token. Investors wishing to follow the developments of this case can check our dedicated Bittensor TAO page as well as our guide on buying TAO.
For investors already positioned, the $250 zone will be the real test. For those watching from the sidelines, waiting for confirmation of stabilization before acting remains the most reasonable stance. Crises create entry points, but only when the root of the problem is identified and addressed. Keep in mind the 6 mistakes to avoid during periods of high volatility.
Sources:
- covenant_ai on X
- JesusMartinez on X
- CoinMarketCap
Related Articles:
