- Bittensor (TAO) price has plunged by around 5% on a daily chart, forcing its value to drop below $242 with a market capitalization of $2.62 billion.
- The drop comes after the departure of one of its biggest subnets, Covenant AI, raising questions about its internal operations and the intention of its co-founder, Jacob Steeves.
- At present, the cryptocurrency is holding a steady open interest, which might play a major role in the future price movement.
On Tuesday, Bittensor (TAO) price experienced downward pressure despite the bullish sentiment in the overall crypto market, declining its price below $241 with a drop of over 5%.
The dip in the cryptocurrency comes amid an internal chaos after the departure of the biggest subnet, Covenant AI. At the time of writing this, Bittensor’s price is currently trading at around $241.97 after a dip of 5.64%, according to CoinMarketCap.
The cryptocurrency currently holds a market capitalization of around $2.62 billion. Its daily trading volume also revolves around $375.95 million.
Bittensor Falls on Centralization Concerns and High Open Interest
According to Coinglass, Bittensor’s open interest now revolves around $400.18 million. This figure suggests the total value of all unsettled TAO futures and perpetual contracts on major crypto exchanges. The current TAO price is revolving around $242.
(Source: Coinglass)
The current open interest is showing that the network is still carrying a lot of borrowed money even after the sell-off following the recent controversy. When open interest stays high like this, it makes the token very sensitive to sudden price movements. If the crypto market gets a bullish sign, then the rise in the open interest could spark a recovery through a short squeeze. Although the current crypto market is filled with bullish sentiment, Bitcoin has soared above $75,000.
On the other hand, if the crypto market faces downward pressure with any negative news, then the same high leverage could trigger more liquidation.
According to TradingView, the 14-day Relative Strength Index is currently revolving around 32. This shows that the token is currently in oversold territory, and it could attract buyers, which can help the cryptocurrency to see a rebound.
At present, there is a major support level around $230, and if cryptocurrency slips below this level, it might send it toward $220. On the other hand, if the cryptocurrency gains upward momentum, there is a major resistance level at around $250. Once the TAO crosses this level, it might experience a rally toward $300 in the short term.
The biggest subnet team, Covenant AI, which builds artificial intelligence models on the Bittensor network, announced its departure from the project last week. The team allegedly called Bittensor’s setup “decentralization theatre.” In simple words, the Covenant AI team stated that they believe the network only pretends to be decentralized.
The founder of Covenant AI, Sam Dare, said that Bittensor co-founder Jacob Steeves is currently holding the entire control behind the scenes. Dare listed clear problems.
He said that Steeves paused rewards for their subnets, cut off their ability to run their own community chat, shut down their main tools without any warning and sold large batches of tokens right when disputes happened to create financial pressure on them. According to Dare, these steps made it impossible for his team to keep building or raise money.
In response, Jacob Steeves said that he does not have the power to stop rewards on his own. He also explained that any sales he made were normal trading of his small holdings in inactive subnets, which added up to less than 1% of his total investment. On the chat issue, Steeves said that he only briefly limited 1 person from deleting fair criticism, not a full removal. He called the exit a planned move to hurt the network.
Later on, he apologized and proposed a new rule called “locked stake,” which would require future teams to commit their tokens for the long term and give everyone a clear warning before leaving. The tussle triggered a drop of around 20% in the Bittensor token.
Recently, many crypto projects have been facing various kinds of issues, which are affecting their native tokens. For example, the rally in RaveDAO price has raised questions about its tokenomics.
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