TAO Surges 30% as AI Tokens Rebound, But Short Squeeze Risks Linger

TAO spikes 30%, yet weak structure and short squeeze signals suggest caution ahead.

Crypto AI tokens are showing signs of a short-term rebound after weeks of heavy losses. In the past 30 days, the total sector market value fell by more than 30% to $14.66 billion. Notably, this has brought renewed attention to several leading tokens. 

Short Liquidations Fuel TAO Spike as Bitcoin Open Interest Declines

Since February 12, buying activity has picked up across parts of the sector. During the rebound, Bittensor (TAO) rose by over 30. As per market observers, the rally came as capital flows into altcoins pushed Bitcoin dominance lower.

Other AI-linked tokens also posted notable gains. Render (RENDER) bounced up 18% , while NEAR Protocol (NEAR) pushed up by 15%. Although the gains rekindled an AI-driven narrative, the broader structure warrants caution.

Even with the gains, TAO’s daily chart structure remains bearish due to its earlier losses. And at longer timeframes, sustained accumulation is absent. 

For a confirmed bullish shift, TAO must close a daily candle above January’s high at $302.4. However, such an outcome appears far-fetched given BTC’s struggles and the current market environment.

As per onchain data, total Bitcoin open interest stands at $44.65 billion, down 2.22% over 24 hours. Drop points to position unwinding rather than aggressive new leverage. Market participants appear to be reducing exposure instead of expanding risk.

Image Source: CoinGlass

Liquidation figures support that view:

• Total liquidations reached $208.76 million in 24 hours.
• Short liquidations hit $119.96 million.
• Long liquidations totaled $88.80 million.
• Short positions were forced out at a higher rate than longs.

Imbalance suggests a short squeeze contributed to TAO’s rally. When forced buying drives price, strength can fade once pressure eases. Such rallies often retrace before finding stable support.

Bittensor Rally Cools as RSI Divergence Signals Weakening Momentum

Relative performance against Bitcoin remains mixed. TAO/BTC pair printed a sharp spike higher but still trades within a broader downtrend. Key higher-timeframe resistance levels remain intact. A clear breakout structure has not formed on the relative charts.

Strong capital rotation usually appears through sustained outperformance versus Bitcoin. Current price action shows impulse followed by cooling momentum. Without consistent follow-through, breakout conviction remains limited.

Looking at the TradingView chart, the RSI surged toward overbought levels during the rally. Afterwards, it drifted back toward neutral. Meanwhile, a bearish divergence formed near the recent local top. 

Image Source: TradingView

Usually, this setup hints at fading upside strength. And cooling momentum raises risk of a short-term pullback.

Price has already moved above the $202 area where many sell orders were placed. On the 4-hour chart, there is a gap in trading activity around $170. That zone could attract price again if a pullback happens. Area aligns with 20- and 50-period moving averages, increasing its relevance as a potential magnet for price.

Even so, some within the crypto space believe that an upside continuation remains possible. If buyers stay in control, price could move toward $241 and $268, based on Fibonacci levels. 

A pullback toward $165–$175 appears plausible before any sustainable advance. Only a decisive daily close above $302.4 would invalidate the bearish swing structure. Until then, recovery looks corrective rather than structural.

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