Bittensor (TAO) faces downside risk amid “decentralization theater” accusations
Bittensor’s TAO token is under heavy pressure after Covenant AI — a major subnet operator — announced its exit from the network, accusing the project of being a “decentralization theater.” This criticism directly challenges Bittensor’s core narrative of being an open, decentralized AI network, triggering a sharp loss of confidence among traders and developers.
Following the announcement, TAO dropped around 30% from its weekly high to near $249, with trading volume surging roughly 250%, indicating strong bearish sentiment. In derivatives markets, about $11.8 million in positions were liquidated — mostly long positions — adding further selling pressure.
Beyond the immediate reaction, technical indicators suggest additional downside risk. Price fractals and historical patterns point to a potential further decline of 25%–45% in the coming weeks. TAO is currently trading within a key Fibonacci retracement zone (0.382–0.5), which has previously preceded deeper corrections during past cycles.
If the pattern repeats, the token could first fall toward around $230 before potentially extending losses to near $144 — representing a total drawdown of up to 45% from current levels.
Fundamentally, the main concern is that if major builders continue to leave the ecosystem, network activity, demand for TAO, and long-term growth prospects could weaken. The controversy over decentralization may therefore have lasting implications beyond short-term price action.
$TAO
