AI News: Market Volatility, Bittensor Drama, and Malicious Router Discoveries

Bitcoin’s recent price action has been highly volatile, while the CMC Crypto Fear and Greed Index remains at 44, indicating a neutral sentiment. Following the breakdown in the ceasefire between Iran and the U.S., geopolitical uncertainty has weighed on risk appetite across markets, including the AI sector.

AI market recap

The AI sector has been range-bound over the past month, with total market capitalization oscillating between $16 billion and $19 billion. On a week-over-week basis, the sector is down 0.8%, driven primarily by a sharp decline in Bittensor (TAO), which posted one of its worst seven-day drawdowns on record.

TAO fell 18.6% week-over-week, dropping to as low as approximately $254 amid a large sell-off. The move was linked to a dispute involving the Bittensor founder and the owner of several prominent subnets.

Several Bittensor subnets were among the week’s weakest performers. Targon (SN4) declined 32%, while iota (SN9) fell 23.5%.

Notable gainers

Despite the weakness in parts of the Bittensor ecosystem, the broader AI sector showed relative resilience, with several major tokens posting gains. The week’s top performers included:

• SKYAI (SKYAI): +76.7%
• DeXe (DEXE): +11%
• NEAR Protocol: +7.2%

The Venice Token (VVV) stood out among the gainers, rising an additional 21.2% over the week to reach a one-year price high.

In the trending list, meme coins featured prominently, with OKZOO (AIOT), Tradoor (TRADOOR), and AKEDO (AKE) each up more than 100% week-over-week.

Social talking points: Bittensor dispute and token sell-off

Bittensor dominated discussion this week after Covenant AI exited the network. Covenant AI operates the Templar (SN3), Basilica (SN39), and Grail (SN81) subnets and created the Covenant-72B model.

Founder Sam Dare accused Bittensor co-founder Jacob Steeves (Const) of centralized control, alleging that Steeves suspended subnet emissions, overrode moderation, deprecated infrastructure, and applied economic pressure through token sales.

Covenant AI responded by dumping approximately 37,000 TAO tokens, worth about $10 million at the time, contributing to the sharp price drop. Dare said: “The promise that drew builders, miners, validators, and investors into this ecosystem is that no single entity controls it. That promise is a lie.”

Const disputed the claims, stating: “I do not have the ability to suspend emissions. What I did do is sell some of my alpha holdings on his three subnets, because they were not running... I don’t have any privilege beyond what normal TAO holders have.”

The dispute highlighted tensions around Bittensor governance and subnet incentives. The article noted that emissions were reallocated elsewhere and that both sides called for fixes such as lock-based ownership.

AI news roundup

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