Bittensor drops 39% – But why TAO could be a buying opportunity
The TAO OBV has made new lows on the 1-day chart despite the strong reaction from the $143 lows made in February.
The AI sector saw sizeable growth earlier in late March and early April.
In the first half of this month, the market cap of the sector rose from a low of $16.24 billion to a peak of $19.12 billion. This represented a 17.7% increase.
Bittensor [TAO] is the largest AI token by market cap, and also witnessed strong gains earlier this month. However, like the rest of the AI tokens, TAO has faced a slump over the past week.
AMBCrypto closely examined whether this TAO price drop was a retracement or the start of another downtrend.
The higher timeframe range formation
On the 1-week chart, Bittensor lacked a clear direction. It saw sizeable losses early in 2025, but has traded within a range from $163 to $493 since then.
The market crash in the first week of February did see a weekly session close below $167.8 (green), the previous weekly swing low. This was followed by a bounce toward $360.
Therefore, instead of a clear structure break, it was more like a liquidity sweep and a bullish reversal.
Within this context, the range formation has been defended. The mid-range resistance around $330 has not yet been overcome, and TAO was in a retracement phase.
TAO traders can wait for a deeper price dip before buying
Now that the higher timeframe context of range formation and bullish bias from the range lows has been established, the 1-day structure can be examined closely.
The 1-day swing structure was bullish. The altcoin has already reacted positively to the range lows. Despite the losses recently, traders can maintain a bullish bias.
The Fibonacci retracement levels based on the bullish impulse move from just below the range lows meant that $233 and $194 were the next support levels to watch.
TAO bulls can likely make a resurgence from this golden pocket.
The OBV has made new lows despite the bounce from the range lows. This, combined with the threat of a Bitcoin [BTC] retracement, was a concern for would-be TAO buyers.
A price drop below $143 would be invalidation of the buying idea laid out here, as it would break the structure bearishly.
Final Summary
- The weekly TAO price action showed a swing failure pattern that resulted in a rally toward $360.
- The current retracement can extend toward $200 before the bulls can stop the price losses.
