A Knife of Coyote is recieved by chance when Butchering a Wishpoosh. The chance of receiving this item increases once you've learned the Viscera & Bits Skill. A Knife of Coyote can be carried in a Toolbelt, stored in a Wooden Toolbox, or hung on a wall.
Knives and Butchering
Having a Knife equipped when Butchering or Skinning creatures will speed up the process, transfer Purity, and prevent the Insanity gained when Butchering by hand. When you finish Butchering any Creature it will leave a temporary Blood Splatter behind.