The AI sector saw considerable growth in late March and early April.
During the first half of this month, the sector’s market capitalization increased from a low of $16.24 billion to a high of $19.12 billion. This represents an increase of 17.7%.
Bittensor (TAO) is the largest AI token by market capitalization and also saw strong gains earlier this month. However, like the rest of AI tokens, TAO has been facing a crisis over the past week.
AMBCrypto took a close look at whether this drop in TAO prices was a retracement or the start of another downtrend.
The formation of higher delay ranges
On the 1-week chart, Bittensor lacked clear direction. It posted significant losses in early 2025, but has traded in a range between $163 and $493 since then.
The stock market crash in the first week of February saw a weekly session close below $167.8 (green), the previous weekly low. This was followed by a rebound towards $360.
Therefore, instead of a clean breakout of the structure, it was more of a liquidity sweep and bullish reversal.
In this context, the formation of the range was defended. The average resistance around $330 has not yet been overcome and TAO was in a retracement phase.
TAO traders can wait for a bigger price drop before buying
Now that the longer time context of the range formation and bullish bias from the range lows has been established, the 1-day structure can be examined closely.
The 1-day swing structure was bullish. The altcoin has already reacted positively to the range lows. Despite recent losses, traders may maintain a bullish bias.
Fibonacci retracement levels based on the bullish impulse movement just below the range lows meant that $233 and $194 were the next support levels to watch.
TAO bulls can likely respawn from this golden pocket.
OBV made new lows despite rebounding from range lows. This, combined with the threat of a Bitcoin (BTC) retracement, was a concern for potential buyers of TAO.
A drop in price below $143 would invalidate the buy idea presented here, as it would break the structure in a bearish manner.
Final summary
- Weekly TAO price action showed a failed swing pattern that resulted in a rally towards $360.
- The current retracement may extend to $200 before the bulls can stop the price losses.
