Bittensor (TAO) is the most hyped AI token, but is the price rally sustainable?

Bittensor (TAO) established itself as the bellwether of the AI space. The mindshare indicator puts it at 50% of the total mentions for the AI sector. 

Bittensor (TAO) is the most hyped AI token, after a highly successful month with more than 100% gains. Based on social media mentions, Bittensor takes up more than 50% of the AI narrative. TAO broke out from the pack in September and is now following the steps of NEAR Protocol as one of the AI heavyweights. 

Research by Kaito AI reveals sentiment and mentions coincide with the project’s peak performance from the past week. TAO fits the narrative of highly active tokens, where demand matches the potential for an active breakout.

$TAO currently at ~50% of all crypto AI mindshare.

Once 2.92% of Grayscale's AI fund, now 29.55%.

Bittensor on top. pic.twitter.com/1nWds08Cxo

— Kaito AI 🌊 (@_kaitoai) October 7, 2024

Kaito is a specialized token tracker, measuring social media sentiment. The past month belonged to the AI narrative, where most tokens rallied. The overall market cap for AI tokens jumped from $24B at the beginning of September to a current level of $36B. 

One of the reasons for the social media mentions is Bittensor’s high-profile supporters. Recently, Steve Chen, co-founder of YouTube, reposted Bittensor content. 

Another source of attention comes from the recent launch of a new subnet, Computenet. Subnets on Bittensor aggregate GPU power and complete various AI tasks. Computenet will specialize in aggregating and renting GPU.

Bittensor claims that any AI project can become its subnet, and use its activity to secure the network. 

TAO rally puts token near all-time peak

The demand for high-potential altcoins and tokens has helped Bittensor’s recent rally. The asset climbed to $621.16 in the past day, after briefly touching a peak above $671 in the past week. TAO is on track to flip the position of Litecoin (LTC) and continue into the top 20 of coins and tokens. 

Bittensor also got a boost from Grayscale’s wider allocation into its private placement Decentralized AI Trust. The trading and investment interest in TAO suggests the recent rally is not entirely due to social media hype.

TAO open interest is up by 50% in the past four days, as the token gains more attention for active trading. The rally of TAO also boosts other prominent AI tokens like RNDR and FET. The recent hike above $600 also caused $1.29M in short liquidations on Binance, the most active Bittensor market.

For now, short and long positions are mostly balanced despite bullish expectations for TAO. The recent TAO rally also coincided with an increase in the altcoin season index, up to 39 points, with constant climbing since the August lows of 20 points.

The AI narrative is competing with meme tokens for social media mentions and attention.

As trading volumes remain near peak levels not seen since March 2024, the question remains whether TAO can sustain the rally. For now, it is up nearly 700% from its lows, after breaking the lengthy downward trend that started in July. TAO attempted two more rallies afterward, but the recent climb is the most significant attempt at reclaiming the $700 range. 

TAO benefits from the project’s social media profile, and the attempt to contact already established tech companies like Google with Bittensor’s features. The Bittensor team is active with social media content, also receiving a like from Elon Musk.

TAO remains a speculative asset in the short term. One of the Q4 predictions for the token is to climb to four-digit valuations. However, Bittensor also has a significant barrier to entry due to its low supply and relatively high price per token. 

One source of demand for TAO is the need to pay tokens for the launch of a new subnet. Some subnets also require payments to avoid spam account creation. Subnet registration costs peaked at more than 9,000 TAO in February. Since then, the fees have been down to around 3,500 on average. This has led to the gradual growth of 52 subnets, of which eight new ones were added since the beginning of September.  

TAO has only gained the support of Polychain Capital as an early backer. The chain and subnets aim for sustainability, as they produce blocks based on the available GPU computational power for AI tasks. 

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Cryptopolitan reporting by Hristina Vasileva