Axie Infinity (AXS) gains over 45%, but ‘death cross’ fears persist

Altcoin

AXS may form a death cross between its 20-day and 50-day exponential moving averages, despite the latest rebound.

Axie Infinity’s native cryptocurrency, Axie Infinity Shards (AXS), bounced higher on Sept. 23 as the market’s focus shifted to its listing on two major crypto trading platforms, Bitfinex and Bitstamp.

The AXS/USD exchange rate surged 15.52% to $69.86, negating all the losses that it incurred at the beginning of the week. The intraday rally came as a part of an overall bullish retracement that began on Sept. 21 when AXS was changing hands for $48.05.

Crypto assets recover

On Sept. 20, markets were on edge due to looming economic trouble in the Chinese property market surrounding Evergrande, which is massively indebted yet the largest builder of homes. Fearing a 2008-like housing bubble scenario, investors precautiously shifted their capital out of the stock market and sought haven in the U.S. dollar.

Are Evergrande’s debts denominated in Crypto? pic.twitter.com/YAoqBVx2Rk
— Michael Batnick (@michaelbatnick) September 21, 2021

The crypto market ended up mirroring the moves of the global stock markets, with top digital assets Bitcoin (BTC) and Ether (ETH) ending up near multi-week lows. As a result, other top tokens also fell in tandem, with AXS diving from $63.99 on Sept. 20 to as low as $48.05 on Sept. 21 — a 24.55% price decline.

However, entering Sept. 22 and 23, almost all the top crypto assets recovered in sync. So, it appears AXS merely followed the trend. Still, its apparently stronger fundamentals, especially the addition of trading pairs on Bitfinex and Bitstamp, made it perform better than most of its top rival tokens.

HUMAN Protocol, Axie Infinity and Polygon will be listed on Bitfinex!

HMT (ERC-20), AXS (ERC-20) and MATIC (mainnet) deposits are now open. Trading for @human_protocol, @AxieInfinity and @0xPolygon on #Bitfinex will start from 21/09/21 at 9:00 AM UTC⬇️https://t.co/jawz5VuLq8 pic.twitter.com/Yk6LT1Ub6E
— Bitfinex (@bitfinex) September 20, 2021

For instance, BTC/USD bounced more than 3% in the past 24 hours, whereas AXS/USD rose more than 8.5% in the same timeframe.

Technical setup

The latest bout of AXS buying has helped to evade potential death cross threats — for now.

Namely, AXS/USD’s 20-day exponential moving average (EMA) risks slipping below its 50-day exponential moving average. Analysts typically perceive a short-term MA closing below a long-term MA as a “sell” indicator, dubbed a “death cross.”

For instance, the chart below shows that the previous 20-day and 50-day EMA bearish crossover was followed by a 50-plus percent price decline.

*AXS/USD daily price chart featuring death cross setup. Source: TradingView*

Offsetting the death cross setup is AXS/USD’s daily relative strength index (RSI), a price momentum indicator that recently bounced off its nearly oversold level, signaling the pair’s likelihood to move higher in the coming days.

The upside analogy receives an additional boost from the psychological support level near $51.90. Traders have lately used said price floor as their point of entry to A, as shown in the chart below.

*AXS/USD daily price chart featuring $51.90’s history as a support and resistance level. Source: TradingView*

As a result, slipping below $51.90 could trigger the death cross setup, with the next support target for bears appearing at $36.47, as per the Fibonacci retracement setup. On the other hand, holding above said price floor could have bulls test $76.59 and $88.98 as their next upside targets.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, and you should conduct your own research when making a decision.

Axie ecosystem swells

Axie Infinity's growth as a gaming project provided bullish cues to speculators. Data provided by Axie World showed that Axie Infinity earned $196.89M in July 2021. Meanwhile, so far in August, the project has raked in circa $45M in revenue, with almost 1 million active users.

"The interplay between Axie’s revenues and AXS price is noticeable," wrote Jeremy Ong and Jayden Andrew, analysts at crypto-focused research firm Delphi Digital.

"This makes sense given the majority of revenues come from Axie breeding fees paid in AXS to the treasury, which significantly decreases the circulating supply of AXS — causing a supply-side squeeze."

Axie Infinity revenue per month. Source: Axie World

In detail, Axie Infinity is a play-to-earn metaverse powered by the Ethereum blockchain. The gaming project enables players to breed, raise, and trade digital pets called Axies. That makes Axie Infinity a blockchain-powered version of the popular Pokemon game.

Meanwhile, AXS acts as a default currency of the Axie Infinity ecosystem that players use to buy and sell Axies and pay trading fees. AXS also operates as a governance token, allowing Axie Infinity players to vote on proposed upgrades.

AXS holders also receive a 95% of the total Axie Infinity revenue.

The economic prospects have so far boosted AXS demand among traders. Data intelligence firm IntoTheBlock noted that the number of Axie Infinity token holders grew by 400% since November 2020—from zero to 16.73K addresses.

Only 1% of the addresses holding AXS have made losses. Source: IntoTheBlock

Currently, more than 93% of wallets holding AXS are in a state of profit.

Technical setup

As stated, the AXS/USD exchange rate looks rangebound between two levels, with $56.57 acting as interim resistance and $36.48 as a temporary support. As a result, traders increased their upside bets on a rebound from $56.57 and go similarly bearish when the price hits $36.48.

Addition support for AXS comes in the form of its 20-day exponential moving average (20-day EMA; the green wave in the chart below) near $35.10.

Axie Infinity's AXS holds above a strong support confluence. Source: TradingView.com

As of late, AXS corrects lower specifically after its daily relative strength index breaks above 70—an overbought area. Therefore, buying the AXS top, especially when the area above remains unchartered territory for the token, carries additional downside risks.

Nonetheless, if AXS/USD breaks above the $5.67-resistance level, its next profit target appears to sit near $76.65. Conversely, breaking below the support confluence near $36 risks crashing the pair to the next line of defense at $24.07, a drop of 33%.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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