Axie Infinity (AXS) Struggles in 2024: Analyzing Bearish Trends and Future Prospects

Axie Infinity (AXS) Underperforms Amidst Bearish Sentiment: What’s Next for Traders?

Axie Infinity (AXS) has struggled to find its footing in recent weeks, experiencing a notable decline of approximately 5.42% over the past month. This downturn comes on the heels of a significant reaction off a major resistance level, raising concerns among investors and traders alike. As the broader market remains entrenched in a bearish sentiment, several indicators suggest that AXS's price dip may continue in the short term.

A Necessary Dip for Future Upswing?

After encountering resistance in the vicinity of $5.366 within an ascending triangle pattern, AXS has retraced from this pivotal zone. The question on many traders’ minds is whether this downward trend will persist and what it could mean for future price movements.

Technical analysis indicates that AXS may continue its descent toward the diagonal support level of this formation. If the asset successfully reaches this support, there is potential for a resumption of upward momentum, with an initial target set at the resistance zone of the triangle pattern.

Should AXS break out above this resistance level, projections suggest a significant surge of 28.47%, which could propel AXS to around $6.895. This estimation is derived from measuring the distance between the resistance and support levels, as depicted in the chart below.

Traders Shift to Selling as Downward Pressure Mounts

Recent on-chain data from Coinglass, as analyzed by KriptoNovini.bg, paints a concerning picture for AXS holders. There is a noticeable trend of traders opting to sell, which signals a potential for further price declines.

The latest liquidation data reveals that long traders have faced substantial losses, with $50.56K out of $51.82K liquidated in the past 24 hours. This data points to a growing influence of short traders, who are effectively betting against an AXS rally and exerting downward pressure on the price.

Furthermore, the funding rate at the time of writing remains negative. This negative rate indicates a higher demand for short positions, suggesting that short traders are willing to pay long traders to maintain their positions. This dynamic further reinforces the bearish outlook for AXS in the near term.

If these metrics continue to hold, AXS’s decline is likely to persist until there is a significant shift in market structure, potentially near the historical resistance zone of the pattern.

Gradual Supply Squeeze Builds Up Amidst Bearish Sentiment

While sentiment among AXS derivative traders leans heavily toward short positions, a contrasting sentiment emerges from the spot market, where traders appear to be positioning themselves for a potential rally.

According to Coinglass, approximately $417.88K worth of AXS has been withdrawn from exchanges in the last 24 hours. This withdrawal reduces the available supply of AXS on the market, contributing to a potential supply squeeze. Such a shift in supply dynamics could indicate that the prevailing bearish sentiment is nearing its conclusion.

As traders withdraw significant amounts of AXS from exchanges, it could set the stage for an upward momentum shift in the coming weeks. With less AXS available in circulation, any increase in demand could lead to upward price movements, suggesting a turning point may be on the horizon.

Market Sentiment: A Double-Edged Sword

The current market sentiment for AXS illustrates a dual narrative. While the short-term outlook appears bearish due to selling pressure and liquidation events, the activities in the spot market signal that traders are preparing for a possible reversal. The balance between these contrasting sentiments will be crucial in determining the future trajectory of AXS.

Moreover, the unique nature of the Axie Infinity platform, which incorporates gaming and NFTs (non-fungible tokens), adds another layer of complexity to its market performance. As players and investors increasingly engage with the platform, their actions may influence AXS's value, regardless of broader market trends.

Key Takeaways for AXS Traders

1. Monitor Key Resistance and Support Levels: Traders should closely watch the diagonal support of the ascending triangle pattern at approximately $5.366. A bounce off this level could signal a resumption of upward momentum, while a breach could lead to further declines.

2. Evaluate Market Sentiment: Keeping an eye on both derivative and spot market activities will provide insights into traders' sentiments. The juxtaposition of bearish derivative trends against potentially bullish spot market activities may offer hints about impending price movements.

3. Consider Supply Dynamics: The recent withdrawal of AXS from exchanges indicates a tightening supply, which could pave the way for a price recovery if demand increases.

4. Stay Informed: Continuous monitoring of on-chain metrics, funding rates, and liquidation data will be essential for making informed trading decisions.

In conclusion, while Axie Infinity (AXS) currently grapples with a bearish trend marked by recent underperformance, the market's dynamics suggest that a turning point may be on the horizon. Traders should approach this volatile environment with caution, leveraging technical analysis and market sentiment to navigate potential opportunities in the coming weeks. The path forward for AXS may be fraught with challenges, but strategic insights and informed decisions could pave the way for a successful trading experience.

The post: "Axie Infinity (AXS) Struggles in 2024: Analyzing Bearish Trends and Future Prospects" appeared first on 24crypto.news

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