• Bittensor trades nearly 28% below its April peak, testing support around $250 on Tuesday.
• TAO retail demand shows signs of recovery with futures Open Interest nearing $400 million.
• Bittensor remains pressured by deteriorating technicals, with the MACD upholding a sell signal while RSI falls toward oversold territory.

Bittensor (TAO) is in an active downward trend, down nearly 3% to trade around $252 at the time of writing on Tuesday. Sentiment surrounding the crypto Artificial Intelligence (AI) market has remained significantly depressed since last week, following the exit of subnet developer Covenant AI.

Sam Dare, the founder of Covenant AI, cited concerns about decentralization and alleged punitive actions by Bittensor’s co-founder, Jacob Steeves. TAO suffered a major drawdown following Covenant AI’s exit, which continues to weigh on the price.

Renewed retail interest could lift Bittensor’s outlook 

Retail investors are expanding their risk appetite after Bittensor’s derivatives cooled last week. The TAO futures OI holds near $400 million on Tuesday, up from roughly $390 million the previous day.

A steadily growing derivatives market serves as a foundation for sustained price recovery, underpinning investor confidence and supporting long-term growth in risk assets such as Bittensor.

Technical outlook: Bittensor slides testing critical support

Bitcoin trades at $252, keeping a bearish near-term bias as price holds below the 50-day, 100-day, and the 200-day Exponential Moving Averages (EMAs) clustered between roughly $259 and $276. The alignment of overhead moving averages suggests recovery attempts are likely to be capped for now, especially given the Relative Strength Index at 40, which shows modestly weak momentum.

At the same time, the Moving Average Convergence Divergence (MACD) remains in negative territory, suggesting downside pressure persists despite selling gradually cooling.

On the topside, TAO's initial resistance is seen at the 100-day EMA near $259, followed by the 50-day EMA around $268 and then the 200-day EMA at $276. A sustained break above the EMA band would be needed to ease the current bearish structure, with further resistance at the 38.2% Fibonacci retracement of the broader downswing at $295 and higher toward the 50% retracement at $342. On the downside, immediate support lies at the 23.6% retracement near $238, with a deeper bearish extension exposing the prior cycle low area around $145.

(The technical analysis of this story was written with the help of an AI tool.)