The crypto market is facing a rough patch as several major events have triggered a wave of panic selling. The U.S. Federal Reserve’s recent comments suggest that interest rates may stay higher for longer, which has made investors more cautious. This has led to a broader “risk-off” mood in the market, where people move their money out of risky assets like cryptocurrencies and tech stocks.

One of the hardest-hit tokens is Bittensor’s TAO, which fell sharply by 16% in just 24 hours. The price dropped from highs of $488 to as low as $389 before attempting a slight recovery to around $400. This drop was much steeper than the average 9% decline seen across other AI-related crypto projects.

Bittensor is a decentralized machine learning network that rewards users for training AI models using blockchain technology. Its native token, TAO, had been performing well recently, especially after the success of AI tech stocks like Nvidia. However, the recent sell-off has hit TAO hard, wiping out much of those gains.

A spike in trading volume—up 17% to $712 million—shows that many investors rushed to sell, driven by fear and uncertainty. This panic was further fueled by the launch of Europe’s first staked TAO exchange-traded product (ETP) by Safello. Although this initially sparked optimism and a price rally, it was quickly followed by a wave of profit-taking that dragged the price down.

Overall, the crypto market lost over $250 billion in value in a single day, bringing total market capitalization down by 5.8% to $3.4 trillion. Bitcoin also fell around 6%, hovering near $100,000. Ethereum slipped 8% to about $3,340, breaking below a key support level at $3,550 and losing 18% over the week. Other major altcoins like Solana and XRP also recorded significant losses.

Adding to the negative sentiment was a recent exploit on Balancer, a decentralized finance protocol, which shook confidence in DeFi security. At the same time, U.S. spot Bitcoin and Ethereum ETFs saw four consecutive days of outflows, signaling growing caution among both retail and institutional investors.

The combination of macroeconomic pressure, declining AI hype, and security concerns is making it difficult for the crypto market to recover in the short term. Investors are now waiting for more clarity from the Fed and stronger signs of renewed interest in AI and blockchain innovations.