Covenant AI's Sudden Exit Sends Shockwaves Through Bittensor Ecosystem, Triggering Double-Digit TAO Freefall
A seismic event rocked the Bittensor ecosystem on April 10, 2026, as the native TAO token plummeted by over 18% in a single day, erasing gains from a previous upswing that had seen prices skyrocket by more than 100%. The catalyst for this downturn was the high-profile departure of Covenant AI, a prominent participant in the network, which managed three subnets: Templar, Basilica, and Grail. Covenant AI's exit has dealt a significant blow to Bittensor's operational infrastructure, with founder Sam Dare launching a scathing attack on the network's decentralization claims, specifically targeting co-founder Jacob Steeves.
Dare's public disclosure alleged that Steeves wielded excessive control over the network, characterizing his management style as autocratic and undermining the principles of decentralization. According to Dare, Steeves had suspended token emissions to Covenant's subnets, stripped their moderation rights, and forcibly deprecated their subnet systems, ultimately leading to a calculated token liquidation designed to exert financial pressure. Dare further asserted that Steeves exerted ultimate authority over the network's triumvirate framework, bypassing established procedures and collaborative decision-making processes.
In response to these allegations, Dare liquidated his entire stake in the network, selling over 37,000 TAO tokens from his personal wallet, which triggered immediate downward pressure on the asset's price. Despite severing ties with Bittensor, Covenant AI has confirmed that it will continue to operate its research division, proprietary models, and ongoing development efforts, with forthcoming announcements regarding new initiatives. The organization remains committed to exploring the technological frontier of decentralized, permissionless artificial intelligence training.
As of press time, the TAO token was trading in the range of $263 to $292, having reached a low of $262.51 and a peak of $341 within a 24-hour period. Transaction volume surged by 156% during this timeframe, with market analyst Cheds Trading observing that TAO had broken below its 200-day moving average and was approaching the 50-day moving average, positioned at $250. The Relative Strength Index (RSI) had declined to 41, suggesting potential additional downward momentum.
The Covenant-72B model, developed by Covenant AI, had previously played a significant role in driving TAO's bullish performance, with a mention by NVIDIA CEO Jensen Huang on the All-In Podcast contributing to a 90% price surge. However, the recent withdrawal of Covenant AI has sent shockwaves through the derivatives market, with open interest contracting by nearly 1% to $392.59 million in just one hour. The most substantial selling activity occurred on OKX, Gate, Bitget, Hyperliquid, and LBank exchanges, with Binance and Bybit yet to reflect comparable adjustments. As the situation continues to unfold, TAO is currently trading around $263, with derivatives open interest standing at $392.59 million.