Bittensor Gains Momentum Amid AI Sector Rally and Supply Reduction

• Bittensor (TAO) surged 30.93% from February 12 to 18, outperforming most AI-linked tokens in the rebound. The rally aligns with a decline in Bitcoin's market dominance, suggesting capital is rotating toward altcoins.

• The price movement coincided with a supply halving in December that cut daily token emissions in half, with over 75% of the token supply now staked. This supply shock has reduced circulating tokens and amplified buying demand, potentially supporting the price increase.

• Subnet usage on Bittensor's network increased by 34% in the past week, indicating real-world adoption and growing institutional interest. Firms like Stillcore Capital have also launched funds to invest in subnet tokens, adding another layer of credibility to the AI blockchain space.

Why Is Bittensor Attracting Attention Now?

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• The recent price surge reflects a broader trend of capital rotation into AI narratives amid crypto market fear. This pattern mirrors past cycles like the 2017 ICO boom and the 2021 DeFi craze, where investors sought high-conviction themes during bear markets.

• Bittensor's unique position at the intersection of blockchain and AI has drawn attention as the market explores new use cases. The network's decentralized machine learning infrastructure is seen as a potential long-term innovation driver.

• The supply halving in December 2025 is a structural change that could support the token's valuation over time. However, the remaining 54% of the supply that is not circulating poses a risk unless demand continues to grow.

What Are the Risks to the Bittensor Rally?

• While Bittensor's price has risen sharply, the overall crypto market remains bearish. Bitcoin dominance is still high, and technical indicators suggest a larger bearish trend.

• On-balance volume (OBV) has bounced, but it remains in a longer-term downtrend, which could signal limited momentum for a sustained move higher. A close above $302.40 is needed to flip the daily chart to bullish.

• Despite the recent rally, TAO is still down more than 50% year-to-date, reflecting broader market conditions and uncertainty about the sustainability of the AI narrative.

• A key risk remains the future expansion of token supply. While the December halving reduced emissions, additional supply growth could undermine the price action unless adoption accelerates further.