The price of TAO has increased by 160% in just over a month. But now the momentum is starting to weaken.
A familiar golden cross pattern is forming on the chart. It has previously preceded sharp corrections.
Daily chart of TAO/USD. Source: TradingView
Key takeaways:
TAO is forming a golden cross, which in the past has typically led to a decline of about 40%.
Activity around Bittensor remains high, but the market behaves restrained.
The price of TAO could drop by 40% in the coming weeks
As of March 26, the 20-day moving average crosses the 200-day from below.
Usually, such a signal is considered bullish. But in the case of TAO, the situation is different. Previously, this pattern often appeared closer to local peaks.
After that, the price could have increased a bit more, but then there was a sharp decline.
Daily chart of TAO/USD. Source: TradingView
In the three previous cases after such a crossover, TAO fell by about 38.5%, 32.5%, and 45.5% over five to six weeks. On average, this is about 40%. If the scenario repeats, the price could drop to $200 by early May.
Additional pressure is created by RSI. The index has remained above 70 for several weeks. This is an overbought zone, which often indicates an overheated market.
Simply put, the growth could have been too rapid. Against this background, the likelihood of a short-term correction increases.
The situation is exacerbated by macro factors. The escalation of the conflict between the USA and Iran drives oil prices up, increases inflation risks, and reduces the likelihood of an early easing of the Fed's policy.
TAO is rising, but the market remains calm
The growth of TAO has noticeably increased activity on social media. However, there is no euphoria that usually appears at local peaks. This is indicated by Santiment data.
The volume of discussions on X, Reddit, and Telegram has risen to the second highest level in the last six months. It was higher only during the hype when TAO reached $529 in November.
Social activity and sentiment regarding TAO. Source: Santiment
At the same time, the mood remains restrained. For every negative comment, there are about 1.5 positive ones.
At Santiment, they believe this is a good signal. Usually, strong euphoria indicates market overheating, and its absence leaves room for growth.
The current pattern still indicates a risk of reversal.
In the last three cases, the price initially grew by 15.6%, 5.7%, and 42.6%, and then reversed down.
Daily chart of TAO/USD. Source: TradingView
On average, the growth after such a signal is about 21.3%. This indicates a possible short-term movement of TAO towards $420 or higher before the momentum starts to weaken.
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