TAO drops 20% after Covenant AI exits Bittensor over governance
Bittensor’s TAO is the top-100 laggard, falling about 20% to around $263 and briefly dipping near $253, the lowest since mid-March. The market cap slipped to roughly $2.5B and TAO fell to about the 38th largest crypto.
Traders tie the selloff to Covenant AI’s exit from the Bittensor network. Covenant AI says emissions to its subnet were suspended, its permissions were removed, and changes were made without its involvement—claims it frames as evidence of centralized governance, after accusations that Bittensor co-founder Jacob Steeves controls key decisions.
On social media, some users allege Covenant AI may have pre-positioned exits (including claims of large TAO sales ahead of the headline) and point to a volume spike about 24 hours earlier. Others, however, see a technical rebound setup: TAO’s RSI is around 16 (extremely oversold), which can precede short-term mean reversion.
For TAO traders, the key question is whether follow-through selling continues or the market shifts to an oversold bounce.
Bearish
Covenant AI’s departure centers on a governance/emissions dispute, which is likely to keep negative headlines and uncertainty elevated for TAO in the near term. Allegations of pre-positioning and a prior volume spike increase the probability of sustained selling pressure rather than a clean technical rebound. Although TAO’s RSI is extremely oversold (a potential short-term mean-reversion catalyst), the event’s politically charged nature and the risk of further subnet/operator fallout make the balance of price impact more downward than upward.