Bittensor's TAO risks 45% dip amid 'decentralization theater' accusation

Bittensor’s TAO token may drop by up to 45% in the coming weeks as Covenant AI, one of its top subnet operators, publicly announced its full exit from the ecosystem.

Key takeaways:

• Covenant AI accused Bittensor of being centralized, leading to a 30% drop in TAO prices.

• Fractals indicate that the token may drop another 25%–45% in the coming weeks.

TAO down 30% from weekly high

TAO’s price dropped by roughly 30% from its weekly high to around $249. A huge part of that downside came after Covenant AI accused Bittensor of running a “decentralized theater.”

TAO/USD daily chart. Source: TradingView

In a Friday post, the team behind the subnet argued that Bittensor may not be as decentralized as it looks. That went against Bittensor’s whole pitch, built around the idea of an open AI network where different subnets can compete fairly.

Once that claim hit the market, traders started to worry that the project’s main story was weakening. If builders begin to lose confidence and leave, traders may fear reduced activity on the network, weaker demand for TAO and slower long-term growth.

Source: X

The Friday selloff was accompanied by a roughly 250% rise in trading volume, indicating that most traders backed the downside outlook.

In the futures market, around $11.83 million in positions were liquidated, of which $9.71 million were long. That suggests many bullish traders were caught offside, adding forced selling pressure to TAO’s drop.

Bittensor liquidations data. Source: CoinGlass

TAO fractals hint at another 25%–45% selloff next

As Cointelegraph covered earlier, TAO was hinting at a 40% selloff after confirming a golden cross between its 20-day (green) and 200-day (blue) exponential moving averages (EMA).

TAO/USD daily chart. Source: TradingView

By Friday, the Bittensor token was moving toward that bearish setup’s projected target near $200, implying roughly 25% more downside from current levels.

Another fractal structure supports the downside case.

TAO is currently consolidating inside the 0.382–0.5 Fibonacci retracement range, a zone that has historically acted as a short-term consolidation area during TAO’s broader macro-top corrections.

TAO/USD daily chart. Source: TradingView

For instance, in November 2025, a breakdown from this same range triggered a drop of over 30% toward the 1.0 Fib level and lower, thus marking a full retracement of the prior rally.

A similar setup emerged in June 2025, when TAO broke below the same Fibonacci range but managed to stabilize near the 0.618 Fib level before rebounding.

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TAO could first decline toward its 0.618 Fib support near $230 If ife pattern repeats.

Prevailing bearish fundamentals may push TAO lower toward the 1.0 Fib retracement near $144, down about 45% from current levels.