Bittensor drops 39% – But why TAO could be a buying opportunity

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.

Source: CoinMarketCap

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

Source: $TAO/$USDT on TradingView

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.

Source: $TAO/$USDT on TradingView

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.