Bittensor's native token TAO crashed nearly 20% on April 10 after Covenant AI announced a complete exit from the network and sold more than 37,000 tokens. The massive selloff erased most of the token's recent gains and triggered heavy selling across major exchanges. Traders quickly reacted as concerns over governance and decentralization spread through the ecosystem.
Governance Dispute Escalates as Covenant AI Founder Accuses Centralization
Covenant AI founder Sam Dare publicly accused Bittensor co-founder Jacob Steeves of maintaining centralized control over network decisions despite decentralization claims. Dare described the governance model as "decentralization theatre" and alleged that key decisions lacked wider community input. He also claimed that several of Covenant AI's subnets faced punitive measures including emission suspensions and moderation restrictions.
The fallout intensified after Dare confirmed the sale of Covenant AI's entire TAO holdings, reportedly exceeding 37,000 tokens. The move added severe selling pressure to an already nervous market — TAO had rallied more than 100% in the previous month. Investors also reacted to allegations of insider token deals, further damaging confidence across the Bittensor ecosystem.
Volume Surges 143% as TAO Drops from $340 to $263
TAO fell from above $340 to nearly $263 within a single trading session as trading volume surged more than 143%. The spike in activity reflected aggressive profit-taking and panic-driven exits from short-term traders. However, larger trading platforms continued to show balanced positioning, suggesting that some market participants still expect stabilization after the sudden correction.
Technical Indicators Weaken; $250 Support in Focus
Technical signals also confirmed fading momentum. Trader Cheds noted that TAO dropped below its 200-day moving average, often a sign of growing downside pressure. Analysts continue watching the $250 area closely because it aligns with the token's 50-day moving average and remains a critical support level.
The relative strength index fell to 41, highlighting the end of bullish strength after weeks of upward movement. TAO futures also weakened across several exchanges as traders reduced short-term exposure. Crypto analyst Michaël van de Poppe described the decline as an overreaction caused by panic selling and the sudden subnet exit, adding that he still holds his TAO position and may increase exposure near current levels. Attention now centers on whether TAO can defend support near $250 and regain momentum once selling pressure subsides.