Bittensor TAO token could drop up to 45% as Covenant AI exits, raising decentralization concerns

Bittensor’s TAO token could fall by as much as 45% in the coming weeks after Covenant AI, one of the network’s top subnet operators, publicly announced its full exit from the ecosystem.

Key takeaways

• Covenant AI accused Bittensor of being centralized, a claim that coincided with a 30% drop in TAO prices.
• Technical “fractals” suggest TAO may decline another 25%–45% in the weeks ahead.

TAO down about 30% from weekly high

TAO fell roughly 30% from its weekly high to around $249. Much of the decline followed Covenant AI’s Friday accusations that Bittensor is effectively centralized, describing it as a “decentralized theater.”

In response, the subnet team argued that Bittensor may not be as decentralized as it appears. The dispute ran counter to Bittensor’s core positioning as an open AI network in which different subnets can compete fairly.

After the claim hit the market, traders reportedly began to worry that the project’s main narrative was weakening. If builders lose confidence and leave, traders may anticipate reduced network activity, weaker demand for TAO, and slower long-term growth.

The selloff was accompanied by a roughly 250% rise in trading volume, suggesting many traders moved to the downside view.

In the futures market, about $11.83 million in positions were liquidated, including $9.71 million in long positions. This indicates forced selling pressure as bullish traders were liquidated.

Fractals point to another 25%–45% selloff

Earlier coverage noted that TAO was signaling a potential 40% selloff after confirming a “golden cross” between its 20-day and 200-day exponential moving averages (EMAs). By Friday, TAO was moving toward a projected target near $200, implying roughly 25% additional downside from current levels.

Additional fractal analysis supports the bearish outlook. TAO is consolidating within the 0.382–0.5 Fibonacci retracement range, which has previously acted as a short-term consolidation zone during broader macro-top corrections.

In November 2025, a breakdown from the same range preceded a drop of more than 30% toward the 1.0 Fibonacci level and below, completing a full retracement of the prior rally. A similar pattern appeared in June 2025, when TAO broke below the same Fibonacci range but stabilized near the 0.618 level before rebounding.

Potential downside levels

If the pattern repeats, TAO could first decline toward the 0.618 Fibonacci support near $230. Further weakness could push the token toward the 1.0 Fibonacci retracement near $144, which would represent about a 45% decline from current levels.