Grayscale’s TAO Trust Sparks AI Crypto Surge as TAO Leads Market Recovery After October 11 Crash

On October 12, 2025, Grayscale Investments filed a Form 10 registration statement with the U.S. SEC for its Bittensor Trust ($TAO), marking the first regulatory filing of its kind for an AI-focused crypto asset.

Once effective, the trust will become an SEC-reporting company, subject to 10-Q, 10-K, and 8-K filings under the Securities Exchange Act of 1934. This move is expected to significantly enhance transparency and institutional accessibility.

The filing lists an initial trust size of $10.8–11.4 million, reflecting steady growth since launch in July 2024. After effectiveness, the holding period for private shares shortens from 12 to 6 months, while OTC trading could open within 90 days, mirroring Bitcoin and Ethereum trust trajectories toward ETF status.

The market responded instantly. TAO surged over 42% in 24 hours to $413, adding more than $700 million to its market capitalization within hours.

Following the heavy market-wide liquidation on October 11, TAO and AI-related tokens emerged as the leading “post-crash recovery” plays, driving renewed optimism across the crypto sector.

DCG’s $10M Bet and Upcoming Halving Reinforce TAO’s Post-Crash Surge

TAO began its rally at $300 on October 1 and climbed to $390 by October 11, gaining more than 30% ahead of the market-wide liquidation event. This surge pushed its market capitalization from $2.9 billion to $3.68 billion, underscoring strong bullish momentum and growing investor attention.

On October 11, TAO was not spared from the crypto market crash, briefly plunging to $280, marking a 28% intraday correction. However, within just two days, the price fully recovered and broke above $400, currently trading at around $413.90. This rapid rebound highlights the asset’s market resilience and reinforced investor confidence after the sell-off.

Three major developments in October have reinforced market optimism around TAO and the broader AI crypto space.

• First, DCG established its Yuma Asset Management division on October 9, backed by a $10 million capital injection. Yuma plans to offer two TAO-focused funds: one tracking the entire subnet network using an index-based approach, and the other concentrating on major blue-chip subnets. Yuma hired TradeBlock co-founders Greg and Jeff Schvey as COO and CTO, strengthening its early-Bitcoin pedigree.

• Second, as mentioned at the beginning of this article, DCG’s Grayscale filed its Bittensor/TAO trust with the SEC, creating the first regulated vehicle for AI-focused crypto assets. DCG is the oldest venture capital empire in crypto, having invested in top-tier Web3 companies such as Circle, Kraken, and CoinDesk, making it akin to the Berkshire Hathaway of the Web3 world.

• Third, Bittensor’s first halving, scheduled for December 12, 2025, will reduce daily emissions from 7,200 to 3,600 TAO, introducing a supply constraint similar to Bitcoin’s scarcity narrative.

Together, these three developments recalibrate TAO’s supply-demand dynamics. Reduced emissions combined with increasing institutional interest create favorable conditions for continued price resilience and growth.

Broader AI Token Landscape: Capital Flows and Sector Differentiation

AI crypto market overview: The sector has entered a new phase in September–October 2025, driven by institutional adoption, technological breakthroughs, and social engagement.

Grayscale Q4 data shows the total market capitalization of AI tokens stands at $15 billion, with $1.9 billion raised year-to-date. Despite an average return of -20% in September–October, underperforming DeFi (fees up 28%) and smart contract platforms, long-term narrative strength remains intact.

Crypto fundraising in September reached $7.02 billion across 154 deals, with AI accounting for $1.9 billion this year. Institutional activity has been significant.

Institutional adoption trend increases: State Street research indicates that 50% of institutions plan to increase their AI crypto allocations from 7% to 16% by 2028, highlighting growing institutional appetite.

This renewed interest is reflected in four major hotspot sectors driving innovation within the AI crypto space.

1. AI Agent Tokens: Rise of Autonomous Systems

Market cap is $5.38B mid-2025, with 1,000+ new tokens daily. Trend shows reactive bots evolving into multi-step autonomous agent systems, with monthly growth of 20%. Representative projects:

• Virtuals Protocol (VIRTUAL): base-chain AI agent creation, 21,000+ agents, $1.6–1.8B market cap.

• ai16z (Solana): AI investment DAO, $2B, 31% APR liquidity mining.

• AIXBT: sentiment analysis agents, 450,000 X followers.

2. DeFAI: Deep Integration of AI and DeFi

TVL expected to grow from $1B to $10B by year-end. Core applications:

• AI-driven DEX (Jupiter on Solana, $10B annual fees).

• Smart lending protocols (Aave AI, Morpho AI, fees +28%).

3. Predictive AI and Trading Bots

Market projected to reach $70B by 2034, with tools proliferating in 2025. Key platforms:

• AIXBT (sentiment/news analysis)

• Token Metrics AI (97.8% weekly index accuracy)

• 3Commas

• Cryptohopper

• Snorter Bot

4. Virtual Agents and Metaverse AI

Customization achieved via AI joint pilots. Example: Virtuals Protocol offers personalized metaverse AI assistants.

Spotlight: Five Projects Leading the AI Narrative

Five projects are leading October’s AI rally. Each represents a distinct layer of the AI-crypto stack, spanning decentralized ML markets, AI-native L1s, and data infrastructure.

Bittensor (TAO) Bittensor builds a decentralized marketplace for machine-learning models, rewarding participants in TAO tokens for the information value of their outputs.

• Core Vision: Open-source protocol connecting ML developers, miners, and validators through a subnet system such as SN4 Targon and SN22 Desearch.

• Funding: $22.8 million total via xTAO. Digital Currency Group provided a $10 million anchor investment, with additional backing from Animoca Brands, Borderless Capital, and Arca.

NEAR Protocol (NEAR)

NEAR is a developer-friendly Layer-1 platform enabling cross-chain swaps across 20+ chains through its Intents system, processing $800 million monthly volume with 113,000 weekly users.

• Funding: Total capital raised stands at $607.43 million, led by Tiger Global with $350 million and Three Arrows Capital with $150 million.

Artificial Superintelligence Alliance (FET) The Alliance, originally formed by Fetch.ai, SingularityNET, and Ocean Protocol (though Ocean recently exited), focuses on developing a decentralized AGI/ASI framework with modular infrastructure powered by ASI-1 Mini model, while actively hosting "Inside ASI: Cloud" sessions and consolidating token governance under FET.

• Funding: $83.05 million raised across major rounds, including DWF Labs ($40 million), Bitget ($10 million), and Outlier Ventures ($15 million seed).

The Graph (GRT)

The Graph functions as Web3's data backbone by providing decentralized indexing through GraphQL queries and Substreams, coordinating network participants with GRT incentives while recently launching Substreams base storage and Token API to enhance AI agent capabilities.

• Funding: $82.2 million total, including $50 million from Tiger Global and $12 million from its 2020 ICO.

OriginTrail (TRAC)

OriginTrail focuses on decentralized knowledge graphs that make real-world data AI-ready and verifiable for enterprise adoption.

• Applications: Used in supply chains, healthcare, and aerospace, supported by EU-funded DMaaST initiatives.

• Partnerships: Collaborations with Swiss Federal Railways and other industrial partners.

• Funding and Token: Raised $21.51 million via its 2018 ICO. TRAC holders can upgrade 1:1 to TNK, the new Layer-1 gas token.

Sentiment and the “AI × Crypto” Convergence Narrative

Social and on-chain data indicate that October’s AI-crypto rally is narrative-driven but increasingly grounded in utility. Community discussions on X focused on convergence and acceleration, viewing decentralized AI as the next layer of blockchain automation and prediction.

Key opinion leaders such as Barry Silbert and Daniele Sesta emphasize rational optimism, contrasting TAO’s institutional path with pure meme speculation.

Silbert called Bittensor the intelligence backbone of decentralized networks, while data firm LunarCrush reported a record surge in AI-related engagement.

The mood across the sector has shifted from hype to pragmatic confidence. Autonomous AI agents are now processing up to 50% of on-chain transactions, while projects like Fetch.ai Agentverse, Virtuals, and DeAgentAI are driving real-world experimentation.

Meme-driven AI tokens remain active, but the dominant tone is clear. AI crypto is no longer a side narrative; it is set to become a leading force in the recovery following the October 11 market crash.

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