Axie Infinity: What Traders Should Watch After AXS's 39% Surge

Axie Infinity (AXS) has recently shown impressive growth, outperforming other gaming tokens with a remarkable 39% rise in just 24 hours and over 50% this week. As AXS approaches key resistance levels in a multi-month descending channel, traders are keenly observing for potential breakout opportunities.

Key Takeaways

AXS has surged by 39% in the last 24 hours and 93% since the start of the year.
The altcoin exhibits a high trading volume, reaching $326 million recently.
AXS is nearing the upper resistance in a downward channel, with a potential breakout above $1.50 offering a 200% price rally to around $4.70.
Current price levels are influenced by significant liquidity clusters, indicating interest from both buyers and sellers.
A reduction in the token supply may lead to a supply crunch if demand remains strong.

Axie Infinity - Here's what traders should bet on after AXS's 39% hike

AXS: Approaching a Multi-Month Channel Breakout

As of the latest updates, AXS's daily chart indicates that the altcoin is nearing the upper resistance of a multi-month descending channel. Following a downturn that brought AXS to a four-year low in December, buyers have returned, propelling the price upward.

With renewed interest in the Web3 gaming sector, bulls are aiming to push the price beyond the descending trendline resistance. If AXS breaks and sustains above $1.50, it could potentially rally by over 200%, reaching around $4.70.

AXS Chart
Source: AXS/USDT on TradingView

Market Dynamics: Price Between Liquidity Clusters

Current data from CoinGlass reveals that liquidity clusters for AXS are primarily located between $1.30 and $1.60. The recent price rise indicates an absorption of liquidity positioned above the current price.

As of now, the majority of liquidity clusters are concentrated above $1.50, although some appear to be forming beneath this level as well. This scenario suggests that both bullish and bearish traders remain actively engaged with AXS.

AXS Price Chart
Source: CoinGlass

The sustained price increase was largely due to a short squeeze that eliminated sell orders lying above the market price. However, this carries the risk of a potential price retracement, particularly as liquidity tends to attract price movements.

Potential Supply Crunch on the Horizon?

AXS has recently reduced its circulating token supply by disabling Smooth Love Potion (SLP) rewards in Origin mode, leading to a decrease in daily token emissions by about 90%. This change raises the likelihood of a supply crunch.

On the demand front, the community has demonstrated strong confidence in AXS by voting to stake 9 million Ethereum (ETH) from its treasury. This institutional action reinforces a long-term bullish outlook for the gaming token.

If the token supply remains limited while demand continues to grow, it could lead to substantial price increases for AXS.

Final Thoughts

The current market conditions surrounding Axie Infinity (AXS) create a compelling environment for traders, with significant price movements expected based on technical setups and community-driven demand. As always, traders should remain vigilant and prepared for potential market fluctuations.