As Bitcoin reclaims $65k, it’s notable that a few altcoins have already begun pulling back.
Notably, Bittensor is showing this setup in real time. From a technical standpoint, the AI project is down nearly 2.5% this week, following TAO’s solid 27% rally last week.
From a structural viewpoint, this appears to be a typical cooldown phase as investors take profits and bulls attempt to defend key support zones.
However, the TAO/BTC ratio tells a different story. As shown in the chart below, the ratio rallied around 21% alongside TAO’s 27% upside.
More importantly, the new week opens with the ratio down over 3.1%, which suggests that weaker Bitcoin momentum helped drive part of TAO’s recent strength rather than true standalone relative outperformance.
Naturally, as Bitcoin flows returned, Bittensor’s [TAO] relative strength has begun to normalize.
However, zooming out, calling this a full-blown reversal still looks premature. On the daily chart, TAO has been consolidating around $260 for over 72 hours.
If this structure holds, TAO could be forming its first lower high since the $330 peak in mid-May, after which the asset failed twice to hold support and printed two lower lows down to $180. This indicated that most of the aggressive sell pressure had already played out.
In this context, if sellers fully exhaust selling pressure and demand stays strong, the market increases the probability that TAO holds the $260 region.
Notably, two key signals suggest this structure may be developing under the surface, meaning TAO could still benefit from the ongoing risk-on momentum.
AI sector rotation strengthens despite TAO consolidation
Bittensor’s recent upside is not driven solely by rotational flows.
As AMBCrypto noted, FUD around Anthropic and the renewed focus on the advantages of decentralized AI systems have triggered a broader risk-on move across the AI sector.
This shift has encouraged capital rotation into AI-linked assets, supporting additional momentum beyond Bitcoin-driven flows.
Interestingly, this momentum is also showing up on-chain. According to CoinMarketCap data, the total AI crypto market cap has climbed more than 7% in the past 24 hours, reclaiming over $20 billion in total market value.
Trading activity has also picked up, with volume rising roughly 15% to about $3.7 billion.
In essence, despite TAO’s technical weakness, the broader setup still looks constructive.
From a broader standpoint, improving liquidity conditions and continued strength across the AI sector support the overall backdrop.
This aligns with Bittensor consolidating around a key range after its sharp early Q2 sell-off, suggesting the asset still has room to run before it overheats.
In this context, the gradual return of risk appetite adds a key bullish layer. It suggests TAO’s recent weakness reflects strategic repositioning rather than panic-driven selling, leaving room for a move back above $300.
