Bittensor Loses Top Subnet Operator. Covenant AI Calls Decentralization a Lie. TAO Crashes 20%.
Covenant AI, a leading Bittensor subnet operator, exited the network accusing co-founder Jacob Steeves of centralized control. TAO dropped 20%+ with $10M in liquidations.
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Launch Free Terminal →Bittensor suffered its worst single-day crisis on April 10 when Covenant AI, one of the network's most prominent subnet operators, announced it was leaving the project entirely. The reason: what Covenant called "decentralization theatre" by Bittensor co-founder Jacob Steeves.
The accusation is severe. Covenant claims that despite marketing itself as a decentralized AI network, Bittensor's governance is effectively controlled by a small group around the founders. This mirrors concerns that have circulated in the community for months but were never publicly articulated by a major participant.
TAO crashed over 20% on the news, dropping from roughly $380 to below $300. Over $10 million in long positions were liquidated as the cascade triggered stop losses across multiple exchanges. At the time of writing, TAO trades around $323 with the bearish MACD crossover confirmed on the daily chart.
The timing is particularly damaging because it comes just weeks after Grayscale increased TAO's weighting in its AI fund to 43% and filed to convert its Bittensor Trust into a spot ETF. The institutional narrative was building nicely until this governance crisis shattered the thesis.
For traders, the key question is whether this is a temporary sentiment shock or a fundamental fracture. If other subnet operators follow Covenant's exit, the network's utility declines and TAO's value proposition weakens structurally. If the community implements governance reforms successfully, this could be a buying opportunity at severely discounted prices.
The orderflow data on Buildix shows TAO with extremely negative CVD and elevated VPIN, indicating aggressive informed selling that has not yet exhausted. Until VPIN normalizes below 0.25 and CVD stabilizes, catching this falling knife is premature.
The Bittensor halving scheduled for December 2026 (cutting daily emissions from 3,600 to 1,800 TAO) provides a supply-side catalyst, but governance credibility matters more than tokenomics in the short term.
Monitor TAO and all AI tokens in real time on the Buildix screener at buildix.trade/screener.