Axie Infinity (AXS) has fallen by approx. 90% after peaking at $ 172 in November 2021.
AXS ‘sharp correction has made it one of the worst digital assets among the top cryptocurrencies. In addition, it could undergo further reductions in the coming months, according to a mix of technical and fundamental incentives listed below.
A low number of players reduces the demand for AXS
To recap, AXS serves as a settlement symbol within the Axie Infinity gaming ecosystem, which allows players to purchase native inflexible symbols (NFT), a number of digital pets called “Axies”.
It also acts as a working symbol that players can use to cultivate new axes.
New users entering the Axie Infinity ecosystem need Axies to put them in the fight against other Axies. When they win, the platform rewards them with another native symbol, called Smooth Love Potion (SLP), while winning larger tournaments gives them AXS.
As a result, old Axie Infinity players rely on new ones to maintain demand for Axies.
Otherwise, they could risk old players selling their revenue to SLP and AXS on marketplaces (for example, cryptocurrencies), thus putting pressure on their exchange rates.
But lowering the value of Axie Infinity’s native symbols also makes the game less attractive to new players, who will still have to pay for Axies to earn lower rated SLP and AXS units.
The Axie Infinity ecosystem has gone through the stages, as mentioned above, in 2022, where the number of players dropped to 8,950 in June from 63,240 in January – almost 85% reduction, according to information from Dapp Radar. Interestingly, this coincides with an 80% reduction in AXS prices over the same period.
At the same time, the volume of Axie Infinity on the ground, measured by estimates of Ronin chain data, has dropped from $ 300 million in September 2021 to just $ 2.12 million in June 2022.
At the same time, the project’s top executives have calmly changed their “play to earn” goal statement to “play and earn,” as its new product manager, Philip La, acknowledged in his August 2021 post that “Axie Infinity needs first to be a game. “
Axie’s problem is that there has always been a speculation tool wrapped up in the discourse of entertainment and society. Developers want him back to just being a game, when most players never saw him as a game to begin with. When income stops, gambling stops. 12/12
– Joshua Brustein (@joshuabrustein) June 10, 2022
Inflation is rising
New inflation data have further reduced the popularity of the top cryptocurrencies, which in one way or another enhances the bearish outlook for AXS.
Interestingly, the US Consumer Price Index (CPI) rose by 8.6% annually in May compared to 8.3% in the previous month, increasing investors’ fears that the Central Bank will be forced to raise interest rates sharply in the coming months, which would push riskier assets lower across the entire line.
AXS fell 7.5% after the report was released on June 10 and fell another 7% on June 11 to reach a three-week low of $ 16.79. The prospect of lower liquidity, led by the Fed’s hawkish policy, could lead to more losses for the Axie Infinity symbol.
AXS price targets key support
A lot of negative fundamentals have sent AXS prices below the key support level, which could lead to longer write-downs in the coming weeks.
AXS dropped below the $ 18- $ 19 support range this week, which has been instrumental in limiting its efforts since early May. Testing a range that support had also followed with approximately 800% bull run between July 2021 and November 2021, as shown below.
Now, the path of the lowest resistance for AXS looks set to go crazy with the next deficit target of around $ 9 in September 2022, more than 50% lower than today’s price. In particular, the $ 9 level served as resistance during the April-June 2021 meeting.
On the other hand, there is a bullish indication of a possible “declining widening wedge” (DBW) pattern in AXS on a weekly timeframe, confirmed by the symbol’s oscillation between two different, declining directional lines.
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Traditional experts view DBW as a bullish reversal pattern, which, as a general technical analysis, resolves after the price breaks above the upper direction of the structure and rises by as much as the maximum height of the pattern, as shown in the figure below.
If the pattern is confirmed, AXS would return on the way to $ 465 within an indefinite time frame, almost 2,500% increase from today’s price.
The views and opinions expressed herein are those of the authors only and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading business involves risk, you should conduct your own research when making a decision.
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