Bittensor's Post-Halving Collapse: Why TAO Tumbled 20%+ Despite Supply Cut

The “Buy Rumor, Sell News” Pattern Strikes Again

Bittensor’s halving event this week was supposed to be a game-changer. Instead, the TAO token has entered freefall, shedding over 22% in just seven trading days. As of Friday afternoon, TAO stands at $220.30 with a year-to-date collapse of -55.88%—a painful reminder that positive catalysts don’t always translate into price appreciation.

This pattern—excitement before an event, followed by sharp selling pressure once it’s announced—is textbook “buy the rumor, sell the news” behavior. The crypto community was buzzing about this halving weeks in advance, but the actual event triggered the opposite of what bulls were hoping for.

Understanding the Halving Mechanism

Bittensor’s halving works similarly to Bitcoin’s approach. The network reduces the rewards validators and miners receive by 50% over specified intervals, cutting the supply of newly issued TAO tokens. This anti-inflationary mechanism is supposed to create scarcity and floor price support.

On paper, this sounds bullish. Fewer new tokens entering circulation should improve supply-demand dynamics. Historical halving events in projects like Bitcoin typically spark optimism and price surges. Yet Bittensor’s experience this week proves timing and market sentiment matter more than fundamental mechanism.

The harsh reality: halving events are no longer automatic catalysts in today’s crypto market. Sophisticated traders front-run the anticipation, then exit once the actual event passes.

AI Narrative Fatigue Meets Macro Headwinds

TAO’s struggle extends beyond halving disappointment. The broader AI crypto sector is facing structural headwinds:

• Valuation concerns: The explosive AI hype cycle of 2024 has cooled considerably. New AI application launches have slowed, creating a “lack of deal flow” that weighs on projects tied to artificial intelligence infrastructure.
• Persistent decline: TAO has been trending downward throughout the year, unable to reclaim 2024 peaks. This suggests the halving wasn’t powerful enough to reverse the underlying bearish sentiment.
• One-year performance collapse: The -55.88% decline over 12 months indicates deep structural weakness, not just near-term profit-taking.

Unlike Bitcoin at $87.26K—which maintains strong institutional support and macroeconomic tailwinds—Bittensor lacks comparable narrative strength during periods of crypto skepticism.

What’s Next for Bittensor?

The critical question: Can TAO establish a price bottom and rebuild momentum?

Currently, every signal points downward. The 22% weekly decline, combined with negative one-month and one-year momentum indicators, suggests exhaustion rather than capitulation. Until TAO shows signs of stabilizing and building genuine adoption narratives around AI applications (beyond just the cryptocurrency infrastructure angle), further weakness remains plausible.

The halving didn’t deliver. Now it’s on Bittensor’s development team and community to find new reasons for investors to hold and accumulate.

Data as of December 26, 2025 - TAO: $220.30 | BTC: $87.26K