Bittensor (TAO) May Shed Gains as Key Indicator Signals Reversal
The value of TAO, the altcoin that powers Bittensor’s decentralized machine learning network, has increased by over 20% in the last week.
However, as a key technical indicator forms a negative divergence, TAO may lose some of these gains.
Bittensor Faces Weakening Demand
TAO exchanged hands at $482 at press time. Its price rallied last week amid the general market growth during that period.
There has also been a significant jump in daily trading volume. At $83.2 million, TAO’s daily trading volume is at its highest since April 11.
However, despite the token’s price growth, its Chaikin Money Flow (CMF) has dropped. At press time, the value of this key indicator rested below its center zero line at -011.
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A negative divergence is formed when an asset’s price rallies while its CMF trends downward. This means that despite the price surge, the buying volume is not as strong as expected, which might suggest that the price increase is not sustainable.
Market participants often interpret this as a sign of a price reversal or correction in the near future.
TAO Price Prediction: No Cause For Alarm
Although TAO’s CMF indicator has shown a weakening buying trend, other key indicators showed that the bulls remain in control and will continue to defend the token’s price in the short term.
Firstly, readings from TAO’s Parabolic SAR indicator showed its dots resting below its price. This indicator measures the token’s potential trend direction and reversals.
When its dotted lines rest under the asset’s price, it suggests that the asset’s momentum is bullish, signaling potential buying opportunities or confirming the continuation of an existing uptrend.
Likewise, TAO’s Relative Strength Index rested above its 50-neutral spot at press time. At 62.78, the indicator showed that while buying pressure may weaken, it still outpaces token distribution.
If the bulls can sustain this trend and accumulation continues to increase, TAO’s price may rally beyond $500 to trade at $592.82.
Read more: Top 9 Artificial Intelligence (AI) Cryptocurrencies in 2024
However, if this projection is invalidated and the negative divergence is confirmed, the token’s price may witness a correction to $448.60.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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