Bittensor (TAO) has broken through a 4-month barrier, but the price may not yet reach $400.

Bittensor (TAO) is trading at $322, down 6.97% after reaching a peak of $380 on March 26. On the 2-day chart, TAO has surpassed the Fibonacci resistance zone of 0.618 at $306, a barrier that has hindered all upward attempts over the past four months. However, after breaking this level, the upward momentum immediately stalled.

Investor Sentiment Drives TAO’s Breakout

According to Santiment’s weighted sentiment chart (from March 3 to March 26), investor sentiment towards TAO skyrocketed to 5.0 on March 25, marking the highest level during the observation period, when the price surged to $380. However, the very next day, this sentiment plummeted to 0.684, coinciding with the rapid reversal in price.

This phenomenon is not the first occurrence. Previously, on March 13, a surge in sentiment led to the price reaching $305 before it reversed to $260. Following that, on March 19, a similar increase occurred, but the price later dropped from $290 to $250. In both cases, the peak in optimistic sentiment signaled a local price top, rather than opening the way for a sustainable bullish trend.

TAO Weighted Sentiment Index | Source: Santiment Although the current sentiment index at 0.684 has not yet fallen into negative territory, the sharp decline from the peak of 5.0 to 0.684 in just one trading session has accurately mirrored previous reversal patterns. The bullish sentiment attracted capital inflows into TAO at high prices, but as sentiment weakened, buying pressure gradually diminished, preventing the price from maintaining its upward trajectory.

Breaking the $364 Level: Key to TAO’s Breakout

The liquidation heatmap data for TAO on March 26 and 27 shows a concentrated area of the largest leverage liquidations at the price level of $364, with $2.98 million in leverage liquidations at this level. Above $364, the total short-term leverage liquidation accumulation reaches $17.81 million.

If this liquidation of $17.81 million is triggered, TAO could witness a strong price increase. Surpassing the $364 level would force short positions to close, pushing the price up to $407 and potentially reaching $469. However, the very $2.98 million in leverage at the $364 level could act as a resistance, absorbing buying pressure and making it a barrier before it can turn into a springboard for price increase.

TAO Liquidation Heatmap | Source: Coinglass Currently, with investor sentiment having sharply declined and the price unable to hold above $364 after reaching $380, the short-term price squeeze scenario will require a new wave of buying. However, the current data from price charts and sentiment does not show signs of any new buying momentum.

TAO Price Forecast: Likely to Revisit the $306 Area Before Continuing Uptrend

Over the past four months, TAO has accumulated under the Fibonacci resistance of 0.618 at $306. The recent breakout has brought a 20.33% increase in just one week, but this upward momentum is at risk of weakening.

TAO CMF Index | Source: TradingView The Money Flow Index (MFI) further reinforces the short-term bearish outlook. The MFI reached overbought territory last week, and in the past, every time the MFI hit this level, it coincided with local price tops, followed by downward corrections.

Currently, the MFI is at 77.79, a level similar to the previous two times when the TAO price experienced significant corrections.

Although TAO is currently holding above the previous resistance at $306, if the price closes daily below this level, it will confirm that the breakout has failed. At that point, the next support levels will be the Fibonacci 0.5 at $275 and 0.382 at $243.

TAO Price Analysis | Source: TradingView Conversely, to invalidate the bearish scenario, TAO needs to close above $364 for two consecutive sessions. This would trigger a $17.81 million short squeeze, pushing the price to the Fibonacci 1.0 at $407 and even the 1.236 at $469. However, if it fails to surpass the $364 level, the resistance that has existed for four months poses a significant barrier, continuing to hinder TAO’s growth.