Bittensor (TAO) dropped nearly 25% after Covenant AI made an exit, accusing co-founder Jacob Steeves of having too much control over governance. Analyst Michaël van de Poppe explained that the real damage came when Covenant’s founder dumped 37K TAO, triggering panic selling and liquidations.
That triggered a deeper chain reaction:
- Validators lost stake = consensus power dropped
- Rewards declined = incentives weakened
- Confidence slipped = more users exited
All of this created a classic negative spiral, with trust taking a direct hit.
Despite the chaos, the team responded with updates like Teutonic-I and a new proposal (BIT-0011) aimed at preventing similar sell-offs in the future.
However, the analyst sees this as a major stress test and breaks the crash down into three possible scenarios.
Scenario 1: Fast Recovery Back to $300–$340
The first path is a strong bounce. If the market stabilizes and governance fixes like BIT-0011 get approved, this entire event could pass quickly.
Analyst sees confidence could return fast, especially as Bittensor remains a vital player in the AI + crypto narrative. He gives this scenario a 45% chance, rising to 60% if proposals are implemented.
Scenario 2: Slow Grind Between $200–$260
If uncertainty lingers, TAO may move sideways. Buyers may not be strong enough to absorb continued outflows, and rebuilding trust could take time.
This scenario carries about a 40% probability.
Scenario 3: Deeper Drop Toward $180
The worst-case path depends on things getting worse from here. If more subnets exit, outflows accelerate, and governance improvements fail, TAO could see another leg down.
But the analyst finds this unlikely, assigning just a 10–15% probability unless a broader domino effect kicks in.
Price Outlook
On the price front, he analyses that TAO fell from $350 to around $250 and is now hovering near $253, which he calls a sharp but manageable correction, not a collapse.
Despite the shock, holding these levels suggests the market is already stabilizing.
His Strategy and Altcoin Outlook
Having said that, he keeps it straight that he isn’t selling. He already holds a large TAO position and is choosing to stay put.
Hence, if the price drops toward $200–$210 due to broader market conditions and improvements, he’s open to adding more.
As per him, AI-driven crypto is still early, and moments like this can reset and strengthen the system, setting the stage for the next move.