AI Crypto Update: Bittensor eyes breakout as AI tokens falter

• Bittensor tests breakout strength, rising by more than 2% intraday.
• The AI segments market cap falls to $14.2 billion, undermining Near Protocol and other tokens.
• TAO edges toward a breakout of a falling wedge pattern, suggesting a 53% price increase.

The artificial intelligence (AI) cryptocurrency segment is witnessing heightened volatility, with top tokens such as Near Protocol (NEAR) struggling to gain traction amid the persistent decline in January and February. The overall AI crypto market capitalization has contracted to $14.2 billion amid sticky risk-off sentiment. 

However, Bittensor's bullish momentum stands out, as it approaches a key technical breakout level and defies the AI sector's downtrend.

Bittensor rebounds as bulls regain control

The leading AI crypto token, Bittensor (TAO), is trading above $190 at the time of writing on Monday, as bulls build on support established around $140 last week. A price increase above the $200 threshold propelled TAO to $215 (intraday high), reinforcing a short-term bullish outlook. 

However, the derivatives market highlights a sudden drawdown in retail activity. TAO's futures Open Interest (OI) holds at $150 million on Monday, down from $163 million the previous day. A persistent downtrend in OI suggests that investors lack confidence in the token's ability to sustain an uptrend. This caps optimism for new positions in TAO while traders close existing orders.

An assessment of Bittensor's short-term technical outlook shows that bulls are regaining control ahead of a potential breakout from a falling wedge pattern. A decisive break above the descending trendline is poised to extend the rally by 53% to highs above $290.

Meanwhile, the Moving Average Convergence Divergence (MACD) indicator holds above the signal line on the daily chart. The green histogram bars expanding above the zero line prompt investors to increase their risk exposure.

Looking ahead, the Relative Strength Index (RSI) at 48 on the same chart is poised to break above the midline, signaling a bullish transition. An extended increase in the RSI toward overbought territory would affirm the bullish grip and steady TAO's uptrend.

Still, traders should not lose sight of the downward-trending 50-day Exponential Moving Average (EMA) at $218, the 100-day EMA at $252 and the 200-day EMA at $291, which cap the upside. A daily close below the current threshold support at $190 may constrain TAO in the falling wedge pattern and increase the odds of a sell-off back to $142 support.

Near Protocol range-bound as losses persist 

Near Protocol (NEAR), on the other hand, exhibits structural weakness, with the second-largest AI token by market capitalization trading well below its 50-day EMA at $1.35, 100-day EMA at $1.61, and 200-day EMA at $1.98. All three moving averages are sloping downward, preserving the short-term bearish outlook.

A supply zone around $1.10 has capped NEAR's upside, while support sits at the lower range boundary of $0.84. The MACD line's position above the signal line hints at a potential breach of the resistance, which may open the door to gains toward the 50-day EMA at $1.35.