Bittensor has been one of the standout tokens in recent months, especially during a period when many projects struggled to find direction. Momentum built quickly earlier this year, and TAO climbed more than 150% between February 12 and March 25 as interest in decentralized AI continued to grow.

That strong run now faces a serious test. Price action has been in a steady pullback phase for some time, although the past 3 days have been far more aggressive. Yesterday’s drop pushed TAO sharply lower and wiped out a large portion of recent gains within hours.

Market data shows the token lost around 25% across 3 days, and the speed of the decline has forced traders to reassess what is driving the move.

A closer look at the situation reveals that this move did not come from broader market weakness or Bitcoin pressure. 2xnmore explained that TAO dropped 27% within 12 hours after a subnet operator exited the network and publicly criticized Bittensor’s decentralization model.

That development triggered a chain reaction. Covenant AI sold around 37,000 TAO, which equals roughly $10M based on recent prices. Market capitalization dropped by close to $900M during the sell-off, and liquidations added to the pressure with around $9M in long positions wiped out.

$TAO dropped 27% in 12 hours yesterday.

Not macro. Not Bitcoin.

One subnet operator quit and called Bittensor “decentralisation theatre.”
Covenant AI dumped 37,000 TAO (~$10M) on the way out.

$900M in market cap. Gone.
$9M in longs liquidated.

The co-founder fired back on X,… pic.twitter.com/inRu60GHPN

The co-founder responded on X and rejected the claims, yet the debate remains active. That uncertainty has played a major role in price behavior.

2xnmore pointed out that price action still respected key technical levels despite the panic. TAO bounced precisely from the 0.618 Fibonacci level near $251, which often acts as a strong support zone in trending markets. Price has since attempted a recovery toward the $270 to $310 range.

Another level now stands out. The 200-day moving average sits near $281, and that level could decide the next move. A break above that zone may bring some short-term stability, while failure to reclaim it could keep pressure on the downside.

2xnmore also made an important observation that goes beyond charts. Governance risk may be one of the least priced risks in decentralized AI systems. When confidence in decentralization weakens, price reactions tend to happen quickly.

Technical structure now gives a mixed picture. TAO trades around $264 at the moment, and that places it close to an important support region. Strong support appears near $268 and extends toward $300 if recovery builds strength.

That reaction reveals something important. Buyers are still defending key levels even after heavy selling pressure.

Another factor deserves attention. The earlier rally created a value gap during the sharp move upward, and price often returns to fill those gaps over time. That behavior means downside risk still exists despite the current bounce.

A move toward $200 remains possible if selling pressure continues or if confidence weakens further. Any recovery above $300 would require renewed strength and a clear shift in sentiment.

The big question now centers on whether this drop presents a buying opportunity or a warning sign.

Timing that decision looks tricky at this stage. Many major tokens still struggle to regain strong momentum, and broader market conditions do not offer clear support. The recent internal event may have reduced confidence among some holders, and that could lead to additional selling as investors secure profits from earlier gains.

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2xnmore emphasized that the key issue goes beyond short-term price movement. The future direction depends on whether Bittensor can address governance concerns before similar events occur again.

Markets now wait for clarity. Price has reacted to both technical levels and fundamental developments within a short period. That combination often leads to unpredictable moves.

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The post Bittensor (TAO) Slides 25% in 3 Days: Time to Buy Again or Stay Off? appeared first on CaptainAltcoin.

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