Axie Infinity (AXS) has came by roughly 90% after peaking out at $172 in November 2021.
AXS’s sharp correction makes it among the worst performing digital assets one of the top-ranking cryptocurrencies. Furthermore, it might undergo further declines within the coming several weeks, based on a mixture of technical and fundamental catalysts the following.
Low player count dampens AXS demand
In conclusion, AXS works as a settlement token inside the Axie Infinity’s gaming ecosystem, allowing players to buy native nonfungible tokens (NFT), a flurry of digital pets known as “Axies.”
Additionally, it functions like a work token that players can spend to reproduce new Axies.
New users that go into the Axie Infinity ecosystem need Axies to pit these questions fight against other Axies. Once they win, the woking platform rewards all of them with another native token, known as Smooth Love Concoction (SLP) while winning bigger tournaments grants them AXS.
Consequently, old Axie Infinity players depend on brand new ones to keep interest in Axies.
Otherwise, they might risk old players selling their SLP and AXS earnings in marketplaces (for instance, crypto exchanges), thus adding downside pressure for their rates.
However when the valuations of Axie Infinity’s native tokens drop, additionally, it helps make the game less attractive to beginners, who’d still need purchase Axies so that you can earn lower-valued SLP and AXS units.
The Axie Infinity ecosystem has went through stages, as pointed out above, in 2022, using its player count shedding to eight,950 in June from 63,240 in January—an almost 85% decline, based on data supplied by Dapp Radar. Interestingly, that coincides with AXS’s 80% cost stop by exactly the same period.
Concurrently, Axie Infinity’s in-platform volume, measured after assessing its Ronin chain data, has dropped from $300 million in September 2021 to some mere $2.12 million in June 2022.
Simultaneously, the project’s top executives have silently altered their “play-to-earn” mission statement to “play-and-earn,” using its new mind of product, Philip La, acknowledging in the August 2021 publish that “Axie Infinity first must be a game title.”
Axie’s issue is it’s been a speculative tool covered with rhetoric about fun and community. The developers need it to return to being only a game, when most players never first viewed it like a game to begin with. Once the earning stops, the playing stops. 12/12
— Joshua Brustein (@joshuabrustein) June 10, 2022
Inflation ramps up
Fresh inflation data has further dampened upside sentiments over the top-ranking cryptocurrencies, which, in some way, boosts AXS’s bearish outlook.
Particularly, the U.S. consumer cost index (CPI) rose by a yearly pace of 8.6% in May versus 8.3% in the last month, heightening investors’ fears the Fed will have to hike rates of interest strongly within the coming several weeks, which may push riskier assets lower overall.
AXS dropped 7.5% following the report arrived on the scene on June 10, and fell by another 7% on June 11 to achieve its three-week low of $16.79. The possibilities of lower cash liquidity, brought through the Fed’s hawkish policies, could cause more losses for that Axie Infinity token.
AXS cost slips below key support
The slew of negative fundamentals has sent AXS’s cost below a vital support level, which can lead to extended downside moves within the coming days.
AXS stepped below $18-$19 support range now, that was instrumental in capping its downside attempts forever of May. Also, testing the number as support had adopted track of a circa 800% bull run between This summer 2021 and November 2021, as proven below.
Now, the road of least resistance for AXS looks skewed towards the downside using the next downside target around $9 by September 2022, greater than 50% less than today’s cost. Particularly, the $9-level offered as resistance throughout the April-June 2021 session.
On the other hand, a bullish cue originates from AXS’s potential “descending broadening wedge” (DBW) pattern around the weekly time-frame, confirmed through the token’s fluctuation between two diverging, falling trendlines.
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Traditional analysts consider DBW like a bullish reversal pattern, which, usually of technical analysis, resolves following the cost breaks over the structure’s upper trendline and rallies up to the pattern’s maximum height, as proven within the chart below.
When the pattern is confirmed, AXS would rebound on the way toward $465 inside an unspecific time-frame, nearly a couple,500% increase from today’s cost.
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