Bittensor (TAO) May Lose the Support of Bulls as Price Drops Near Channel's Lower Line

The price of the leading artificial intelligence-related token Bittensor (TAO) has trended within an ascending channel since early September.

Artificial intelligence (AI)-related cryptocurrencies have been on a tear in recent months, outpacing the gains of the broader digital asset market. This interest follows a downturn in the cryptocurrency market.

As a result of this downturn, several AI cryptocurrencies have lost steam in their price rally. One such token is Bittensor (TAO), which has seen its price slide from highs of over $1,800 in early September to current levels of around $550.

This price decline comes as buying pressure for the altcoin has waned, leaving TAO on the cusp of breaking out of an ascending channel on lower timeframes. This technical formation is used to identify an asset’s uptrend and potential support and resistance levels.

However, due to decreasing demand for the altcoin, Bittensor currently trades close to the lower line of its ascending channel at $558.80. When an asset trades near this lower line, it signifies that the price is approaching the channel’s support level. At this juncture, buyers often step in to drive the price back up, making it a potential entry point for traders.

However, if the asset fails to hold above this lower line and breaks below the channel, it signals a weakening uptrend or the beginning of a bearish reversal.

BeinCrypto’s analysis of TAO’s key indicators suggests that this may be the case for the altcoin. For instance, its Chaikin Money Flow (CMF) is on a downtrend, below the zero line at -0.21. This indicator measures the strength of money flow into or out of a security over a specific period. When negative, selling activity is higher than buying activity, indicating that more traders or investors are selling the asset than buying it. Traders interpret this as a potential signal for a continuation of a downtrend.

Moreover, TAO's declining on-balance volume (OBV) attests to this bearish outlook. It is at 41,254 at press time, indicating a 97% decrease over the past 21 days. The OBV measures buying and selling pressure based on volume. When it falls, it signifies that there is more selling volume than buying volume, indicating that sellers are more active in the market than buyers, leading to downward momentum in price.

If the current selling momentum persists, Bittensor’s price risks falling toward the key support level of $558.80. Without new buying pressure entering the market, the bulls may struggle to defend this line, potentially pushing the altcoin down to $219.60. Should this level fail to hold, TAO could retreat further to its August 5 low of $163.70.

However, if fresh demand enters the market, Bittensor’s price may rebound off the lower boundary of the ascending channel, attempting to break above the resistance at $736. A successful breakout could propel the altcoin toward the $1,249 mark, signaling a bullish reversal.

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