Bittensor (TAO) is becoming the leader in the AI narrative, as well as the biggest short-term gainer. The AI narrative also recovered fast after the recent market dip. 

Bittensor (TAO) is gaining importance in the AI narrative. Recently, the asset became the top gainer among AI tokens, up more than 100% in the past month. TAO traded at $548.70, rising from the $230 range at the beginning of September. 

The past month was also the most successful for TAO in the year to date, higher than January’s growth of more than 78%. Barring the initial launch and vertical rally after TAO was launched, the most successful month for the token was November 2023, when TAO rose by 238.7%. The entire AI sector rallied from a valuation of $24B in September to the current level of $34B, with a peak at $38.

TAO gained attention in the past day, with a quick dip to the $475 range and a fast recovery. TAO now trades at levels not seen since April, though still far from its yearly peak above $713. 

TAO is also gaining importance in Grayscale’s Decentralized AI Fund. The asset has the second-biggest allocation in the portfolio, after NEAR. TAO started with a 2.6% allocation and expanded to a weight of 27.6%, almost on par with NEAR Protocol. Bittensor’s allocation easily surpassed former stars Render (RNDR) and Filecoin (FIL). 

Grayscale’s AI fund is considered riskier and is only open for private placement to accredited investors. TAO remains a volatile asset, still mostly depending on staking, DeFi yield and speculative trading. TAO remains even more attractive than Render, despite not focusing on renting out GPU, but instead relying on DeFi yield and staking.

TAO and NEAR make up around 8.2% of the entire AI token market, but are responsible for nearly 60% of Grayscale’s selection. The recent changes in weights followed the TAO trend of breaking out from the pack. 

AI narrative accelerated in September

AI and DePin remained two narratives that kept returning in 2024, despite altcoin and token slumps. The real-life usage of generative AI and LLM put more attention on the available physical infrastructure and shared GPU that some of the projects provide. 

Bittensor focuses on the decentralized, community-based creation of models, while also tokenizing consensus and activity. Bittensor is also not a single project, but an ecosystem of projects, including AIT Protocol, Architex, Commune AI, LuminousTAO, Tatsu, and Neural Tensor. The project is also categorized as a provider of AI infrastructure, or a DePin project. 

In any case, TAO itself is a highly active asset, which is responsive to market trends. TAO is also one of the most staked tokens, due to the validator structure of Bittensor. A total of 78.28% of TAO tokens are staked, creating significant scarcity. The other reason for staking TAO are the high yields from validators and the daily payout of incentives. 

TAO also has a limited free float of around 7.38M tokens, or around 16.78% of the total supply. The Bittensor network mimics the mining of Bitcoin, with a total of 21M TAO to be produced. TAO tokens are now in the steepest stage of their production until November 2025. After that, new TAO will be produced at a more gradual pace. 

Bittensor also functions as an L1 network with more than 129K active accounts as of October 2024. The L1 chain was built on Polkadot’s Substrate, though it still has limited usage. The validators still perform computational work, but one related to AI models and trainings. 

The outputs of models are tested for accuracy and some validators win the right to produce a block based on their model. Validators like Subnet 10 use AI models to perform DeFi operations and algorithmic predictions. All subnet validators on Bittensor perform slightly different roles. The success of the models is used as measuring the ‘proof of intelligence’ to produce the next Bittensor block.

Bittensor has recovered from its hack in July, when compromised wallets leaked $8M worth of TAO. The reason for the attack were compromised wallets where a hacker managed to acquire the private keys. The attack turned out to be directed to stealing private keys, and the Bittensor protocol was deemed safe. Despite this, the project’s team shut down block production temporarily and partnered with exchanges to claw back the assets.

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Cryptopolitan reporting by Hristina Vasileva. 

The European Union has approved tariffs of up to 35.3% on all kinds of electric vehicles (EVs) imported from China.

Reports say this decision follows a year-long investigation by the European Commission, targeting Chinese EV manufacturers for receiving unfair government subsidies.

The subsidies apparently distort the market and give Chinese manufacturers an advantage over European automakers.

France, Italy, Greece, and Poland supported the tariffs, while Germany, Hungary, Malta, Slovakia, and Slovenia opposed it.

Germany is concerned that this would hurt its car manufacturers, many of whom rely heavily on the Chinese market for exports and parts.

China’s reaction

The European Commission has left a door open for negotiations, saying the tariffs could be dropped if China addresses the EU’s concerns.

But China has already responded, calling the tariffs “protectionist” and threatening to retaliate with their own measures.

The Commission says any solution must comply with World Trade Organization (WTO) rules and be effectively enforced.

The newly proposed tariffs would add to the existing 10% duty that the EU already imposes on imported cars.

The highest rates (up to 35.3%) will primarily target Chinese EV manufacturers who didn’t cooperate with the investigation, while companies like Tesla, which produce cars in China but aren’t Chinese-owned, have a lower rate of around 7.8%.

A Volkswagen representative said the tariffs are “the wrong approach” and that a trade war with China could have damaging consequences.

The German Automotive Industry Association (VDA) also warned against escalation. Hildegard Müller, VDA’s President, called for both parties to reconsider this decision so as to avoid a full-blown trade conflict.

Implications for global trade

The prolonged trade war between the EU and China has some big global consequences. Beijing has launched investigations into European imports of brandy, dairy, and pork products.

This could result in a tit-for-tat scenario, where more goods get caught in the crossfire of the escalating tensions.

Spain’s Economy Minister, Carlos Cuerpo, called for the negotiations to remain open, hoping to prevent the tariffs from taking effect.

His letter to European Commission Vice President Valdis Dombrovskis asked for continued dialogue rather than enforcement.

Slovakia and Hungary also joined Spain in opposing the tariffs, arguing that they could hurt their economies.

China’s economic countermeasures

In the midst of this trade tension, China is dealing with its own economic issues.

During its Golden Week holiday, which was the 75th anniversary of the People’s Republic of China, the country launched many economic measures.

These included aid for the property industry, cash handouts for lower-income citizens, and increased government spending.

The People’s Bank of China (PBOC) also introduced several financial tools to support the stock market, which has been under pressure in recent months.

One of the main tools was a funding package worth 800 billion yuan (approximately $114 billion). This is for insurers, brokers, and asset managers to help them buy shares and stabilize the market. 

The central bank is focusing on pushing banks to lend more and support the country’s economic recovery.

Two days after the PBOC’s announcement, Xi Jinping chaired an emergency meeting of China’s top leaders, known as the Politburo, where they promised to ramp up government spending and bring additional policies to support growth.

China’s stock markets reacted strongly to these. The Shanghai Composite Index jumped by more than 8% on the day before the Golden Week holiday.

This was the index’s biggest single-day gain since the 2008 global financial crisis. Over the course of five days, the index rallied by 20%. 

The Hang Seng Index in Hong Kong followed suit, rising over 6% after the Shanghai markets closed.