AI giant's first-ever halving! Bittensor (TAO) reaches a historic milestone, analysts warn of "sell the news" risk

The decentralized artificial intelligence network Bittensor is about to experience its first-ever token halving event since inception, expected to be triggered around December 14. At that time, the daily issuance of its native token TAO will be sharply reduced from 7,200 to 3,600 tokens, with the network’s annual inflation rate directly cut in half. Although Grayscale analysts see this as a long-term value catalyst akin to Bitcoin’s halving—and point out that institutional interest is heating up—market sentiment remains unusually cautious. The price of TAO has dropped nearly 28% over the past month, technical indicators show a key support has been lost, and multiple traders are warning that the market may have already priced in the positive news, signaling a classic “sell the news” correction risk.

Halving Countdown: How Does Bittensor’s Deflationary Mechanism Differ from Bitcoin’s?

The much-anticipated Bittensor first halving shares similarities with Bitcoin but also features critical differences at its core. Both set a hard cap of 21 million tokens and use periodic block reward halvings to engineer scarcity and control inflation. Bittensor’s first halving will be automatically triggered when its circulating supply reaches 10.5 million TAO, and the current circulating supply is already very close to this threshold.

However, unlike Bitcoin, which triggers halvings strictly based on time (roughly every four years), Bittensor’s halving is triggered by the “circulating supply” status. This means if network activity surges—leading to more registered miners or validators and accelerating token release—the halving date could arrive slightly earlier. Conversely, if network growth slows, the halving may be delayed. This design ties the halving pace more directly to the network’s actual growth and adoption, giving it a dynamic character.

The scope of this halving impacts the entire Bittensor ecosystem’s incentive system. The daily reduction of 3,600 TAO will directly affect the rewards received by participants providing computing power, validation services, or operating specialized AI subnets. This is not just a decrease in supply, but also a stress test for the network’s economic model: after rewards are halved, can the network continue to attract and retain high-quality contributors based on the value of AI services it provides, rather than relying solely on inflationary incentives? This is a question Bittensor must answer on its path to maturity.

Bittensor First Halving Key Data

Trigger condition: Circulating supply reaches 10.5 million TAO

Current circulating supply: About 10,451,753 TAO (as of publication)

Estimated time: Around December 14, 2025

Daily issuance before and after halving: Drops from 7,200 TAO to 3,600 TAO

Annual inflation rate change: Directly halved

Total cap: 21 million TAO (same as Bitcoin)

Long-Term Bullish vs. Short-Term Risk: Market Sentiment’s “A Song of Ice and Fire”

Opinions about this halving present a clear “ice and fire” dichotomy. The optimistic camp, represented by Grayscale Research Analyst Will Ogden Moore, likens this halving to Bitcoin’s historical trajectory. Moore points out that despite four halvings, Bitcoin’s network security and market value have continued to strengthen even as miner rewards diminish. He believes Bittensor’s first halving marks a key maturity milestone on the path to its total cap, structurally increasing TAO’s scarcity.

Moore further lists fundamental factors supporting his bullish view: the dynamic TAO mechanism launched in February this year made subnets directly investable, attracting institutional capital like Yuma Asset Management to set up dedicated funds; three listed companies have established TAO reserves, with leading firm TAO Synergies holding about $12 million worth of tokens. These early signals of institutional adoption, combined with halving-driven supply contraction, form potential positive price catalysts.

However, traders and analysts are pouring cold water on the narrative based on chart signals. Although TAO rose 5.2% over the past week, this fails to offset its 28% drop in the past month. More critically, technical analysis shows TAO’s price has broken below a key support area and faced “fierce rejection” when trying to reclaim it—a clear sign of waning bullish momentum. Many market participants worry that the positive effects of the halving have already been priced in, and when the event actually occurs, it may become an opportunity for profit-taking and “selling the news.”

Technical Warning: Key Levels Lost—Will the “Sell the News” Scenario Unfold?

The market’s caution is not unfounded; TAO’s recent price action provides technical grounds for “sell the news” concerns. Some analysts point out that TAO has lost an important three-day chart support area and was strongly pushed back down during the retest. This failed “breakdown retest” pattern is typically a sign of a continued downtrend or weakening trend in technical analysis.

The analyst outlined a specific risk path: if the current price area around $300 continues to act as resistance, TAO will likely further correct to $230, and even a drop below $200 cannot be ruled out. This reflects the prevailing mindset of many short-term traders: in an already weak market, even widely recognized long-term bullish events can spark new rounds of selling due to “buy the rumor, sell the news” psychology.

This divergence essentially reflects the perspective difference among investors on different timeframes. For long-term believers and institutions like Grayscale, the halving is a fundamental event changing the token’s long-term supply-demand structure, with short-term price fluctuations seen as noise. But for trend traders and short-term capital, price momentum, market sentiment, and the classic “buy the rumor, sell the fact” pattern are key. At present, the latter seems to have the upper hand. TAO’s price has failed to stage an effective rally ahead of the halving, which itself undermines the bullish event-driven narrative.

Bittensor Ecosystem Status: The Frontier of AI and Crypto Integration

To understand the far-reaching significance of the halving, one must look at the Bittensor network itself. It is not merely a token system, but an open protocol network designed to integrate artificial intelligence with crypto economics. Its core architecture consists of numerous “subnets,” each specializing in a specific AI task such as data storage, computing power provision, AI agents, or deepfake detection. Currently, more than 129 subnets are active on the network.

The network’s operating mechanism is this: participants earn TAO rewards by contributing valuable data, models, or computing power to these subnets. The amount of reward depends on the “usefulness” of their contribution as validated by the network. This means the value of TAO is theoretically rooted in its ever-growing, decentralized AI service capabilities. The dTAO mechanism launched this year allows investors to directly purchase tokens representing subnet shares, effectively creating tradable “stocks” for each AI vertical, greatly enhancing capital liquidity and the financial depth of the ecosystem.

Therefore, the halving event, at a deeper level, is a test of Bittensor’s “value creation-value capture” cycle. When protocol-level inflationary incentives are halved, can the network generate enough external revenue from market-demanded AI services produced by its subnets to compensate validators and contributors? This is the key leap toward breaking dependency on pure token incentives and moving toward a sustainable, mature ecosystem. Institutional capital entry can be seen as an early bet on this outlook.

Bittensor’s first halving is like a carefully orchestrated “stress test,” simultaneously examining the resilience of its economic model, the confidence of its community, and the complexity of market dynamics. It clearly reveals a fact: in the crypto space, even classic scarcity narratives modeled after Bitcoin do not guarantee a simple price path. When positive events meet weak technical structure and cautious market sentiment, the ancient “sell the news” playbook can unfold at any time. For investors, it may be more important now than simply chanting “halving bull market” to closely monitor post-halving changes in network fundamentals—such as subnet activity, institutional holdings, and staking participation rates. These are the true long-term indicators for determining whether Bittensor can truly cross its milestone and become a cornerstone asset in the AI and crypto integration era. The noise of short-term price movements will eventually fade, while the network’s own value creation ability is the ultimate answer across cycles.