Bittensor's native token, TAO, is exhibiting early signs of stabilization after a significant and orderly decline, with technical analysis pointing to a shift from aggressive selling into a compression phase. The price recently broke below a key support level of $228, triggering a technical breakdown that pushed TAO to trade around the $220 area. This move has been attributed to a combination of factors, including post-halving miner selling, weak sentiment across the AI crypto sector, and a clear technical failure.
The recent halving event on December 14th reduced daily token issuance from 7,200 to 3,600 TAO. While this is a long-term bullish supply constraint, it has prompted short-term selling pressure as miners sell holdings to offset lower rewards. Trading volume over the past 24 hours is down approximately 7.46%, indicating steady distribution rather than panic.
From a technical perspective, the loss of the $228 support level was a critical event, turning that level into resistance. Momentum indicators reflect the bearish pressure: the 14-day Relative Strength Index (RSI) is near 32.2, approaching oversold territory, and the MACD histogram remains negative at -4.61. The next major support level traders are monitoring is the 2025 low near $183.
However, chart analysis from sources like GainMuse and TradingView suggests the market structure is changing. After weeks of declining within a well-defined descending channel, price action has begun forming higher lows along the channel's lower boundary, compressing into a triangular formation. This signals fading momentum on both sides and often precedes a decisive move. The 4-hour chart shows TAO holding above recent lows and moving sideways, confirming that downside momentum has materially slowed even if a new uptrend is not yet confirmed.
The broader AI crypto sector has also been a headwind, underperforming with a decline of around 7.3% over the past week amid discussions of regulatory risks for decentralized AI projects. This has contributed to TAO's market ranking slipping to approximately #36. Despite the short-term challenges, longer-term fundamentals remain, including institutional exposure through products like Nasdaq's VIRTAO ETP.
TAO is now caught in a technical tension between descending resistance from the broader corrective structure and rising support defined by higher lows. A breakout above resistance would signal a transition to a recovery phase, while a loss of the rising support would invalidate the compression thesis and reopen the path toward the channel's lower boundary. The market is awaiting a catalyst to resolve this narrowing range.
