Bittensor Forecast: Covenant AI Leaves TAO, Triggering a 16% Decline

crypthub

2 days ago

Price Collapse and Catalyst

Bittensor’s TAO token dropped about 16% in six hours after Covenant AI, the team behind the Covenant‑72B model, announced its exit from the network. The developer accused co‑founder Jacob Steeves of maintaining centralized control over its subnet, contradicting the network’s decentralization promise. Sam Dare publicly called the ecosystem’s core claim a “lie,” fueling panic among investors. The announcement acted like a circuit‑breaker, wiping out much of TAO’s recent rally.

Technical Outlook

TAO fell to roughly $280, slipping below the key $300 support level that had held for weeks. A bearish MACD crossover and a failed $360 resistance test suggest continued downside pressure. On‑chain metrics rank the 24‑hour decline among the steepest in the large‑cap AI token space. Analysts warn that the price must retake $300 within 48 hours, or it could tumble toward $250.

Governance Risk Impact

The departure of Covenant AI erodes the decentralization premium that attracted builders and capital. Traders with longer memory see the event as a red flag, prompting rapid capital rotation out of TAO. Social sentiment turned sharply negative, with only 1.5 positive comments per negative comment despite a recent dominance peak. The leadership silence amplifies the risk of further subnet exits and deeper price drops.

Capital Shift to Bitcoin Hyper

Investors are eyeing Bitcoin Hyper ($HYPER), a Bitcoin Layer‑2 project integrating the Solana Virtual Machine for fast, low‑cost contracts. The presale has raised $32 million, trading at $0.0136, and offers staking for early participants. Its governance‑free model and technical promise present an alternative to the now‑questioned Bittensor ecosystem.