At the time of writing, Axie Infinity had outpaced its fellow gaming tokens with gains of 39% over the last 24 hours. In fact, the altcoin has seen over 50% gains this week alone, having appreciated by 93% since the year started.
During this rally, AXS had the highest trading volume in the sector after three consecutive days of $100 million. The daily trading volume spiked by more than 190%, climbing to $326 million according to CoinMarketCap.
This is evidence of AXS’s dominance over other gaming tokens. However, despite the altcoin’s bullish strength since the start of the year, it remains trapped within a massive downward channel. Hence, the question – Is a breakout on the way?
AXS eyes multi-month channel breakout
A look at AXS’s daily chart revealed that the altcoin was approaching the upper resistance of a multi-month descending channel. This downtrend saw AXS hit a four-year low in December, before bulls returned and ignited the ongoing price trajectory.
With the Web3 gaming sector back in the midst of traders, bulls could push the price past the descending trendline resistance. A break and hold above $1.50 could see it rally by more than 200% – To around $4.70.
Worth noting, however, that the market bears could also retaliate, preventing bulls from higher advances. If that happens, the anticipated trend reversal would be ruled out and possibly, the price would extend its current trend.
Price sandwiched between liquidity clusters
The liquidity clusters were concentrated above $1.30 to $1.60, as per data from CoinGlass. AXS’s price rallied as it absorbed liquidity that was sitting above it on the charts.
At press time, most of the clusters were concentrated above $1.50. However, there were some that semed to be forming below this level too. This suggested that both bulls and bears remain interested in the altcoin.
The altcoin’s sustained price spike was a result of a short squeeze that cleared sell orders that were forming above the price. That implited there may be a risk of a retracement that would trigger the orders sitting below $1.50. Especially since liquidity acts as a price magnet.
Is a supply crunch in sight?
Now, AXS has slashed its circulating token supply after disabling Smooth Love Potion (SLP) rewards in Origin mode. This has reduced the daily emissions by about 90%, heightening the chances of a supply crunch.
On the demand side, the community underlined its confidence in AXS after voting for its treasury to stake 9 million Ethereum (ETH). This can be interpreted as institutional-grade execution reinforcing the long-term vision of the gaming token.
If the token supply remains reduced and the community’s demand increases, genuine buyers could easily drive up the altcoin’s price.
Final Thoughts
- AXS has rallied by 93% since the start of the year, outpacing all other Web3 gaming tokens.
- Axie Infinity now faces a crucial test around the $1.50-level.
