Is Axie Infinity overheating? AXS price hits record high after 100% QTD rally

AXS, the native token of Axie Infinity, a play-to-win non-fungible token (NFT) game built atop the Ethereum blockchain, rallied over 100% on a quarterly period (QTD) to refresh a new record above $ 155.

Nonetheless, the cryptocurrency is now at risk of slashing some of its recent gains as a key technical indicator, dubbed the Relative Strength Index (RSI), indicates its overbought conditions. In doing so, it could correct below $ 90, a drop of almost 40%.

The bearish outlook emerges after studying the relationship between AXS price and its RSI readings. In detail, when the RSI rises above 70, this mainly prompts AXS to consolidate sideways or lower later.

But in either case, the token ends up testing its 20-day exponential moving average (20-day EMA; the green wave in the chart below) as a provisional support level.

Daily AXS / USD price chart showing its response to RSI readings above 70. Source:

For example, the RSI has closed above 70 three times since July 1, 2021 and each time prompted the price to hit its 20-day EMA within 7-30 days. This has made buying AXS for an overbought RSI a risky preposition for traders, increasing their likelihood of facing short-term losses.

As a result, the Axie Infinity Token could follow a similar bearish path in the days / weeks to come with its next bearish target hovering around $ 87. Nonetheless, if the price rises further, as happened after the July overbought signal, AXS ‘bearish target could move to $ 90 or above.

Is HODLING a better strategy?

The 20-day EMA served as a buy indicator for traders following RSI-induced corrections. In detail, traders decided to buy the downside anticipating that the AXS price would retest and close above its previous high levels.

Therefore, it is visible that traders who did not sell their AXS holdings during the price corrections to the 20-day EMA managed to make decent paper profits – the Axie Infinity token climbed over 2,500 % since July 1.

AXS ‘growing utility in the virtual world of Axie Infinity, called Lunicia, has become a major catalyst for its demand among gamers and traders. In detail, players maneuver colorful creatures called Axies to earn two types of tokens.

The first, known as Small Love Potions (SLP), is awarded for successful battles; it can be cashed in or reused to spawn new Axies. Meanwhile, the second token, AXS, can be earned by winning seasonal tournaments or selling Axies on Axie Infinity’s dedicated internal market.

Axie Infinity’s active user count stood at 1.85 million on Monday, up more than 4,500% since April, with total cumulative revenue reaching $ 815 million in the same period. , according to Token Terminal. This made Sky Marvis, the company behind Axie Infinity, the fifth most valued video game company in the world by market capitalization.

The best gaming companies in the world. Source: Messari

Strong fundamentals intensified traders’ confidence in AXS, which explains its ability to rebound every time after suffering a sharp correction to its 20-day EMA.

AXS Staking Service, DEX Launch

Axie Infinity’s latest market buying episode has also surfaced due to a new feature that allows AXS holders to stake their tokens to earn returns. Since its launch on September 30, the staking feature has attracted more than 12.44 million AXS tokens (~ $ 1.88 billion at current rates).

AXS staking dashboard. Source: Infinite Axis

Staking effectively removes the active supply of tokens from circulation, which, in the face of increasing demand for the asset, tends to drive up its prices.

Related: Massive Drop and AXS Staking Catapult Axie Infinity to New All-Time High

Meanwhile, Sky Mavis has announced that it will launch a Decentralized Exchange (DEX) on the Ethereum-linked Ronin side chain. In doing so, the company aims to provide faster AXS and SLP liquidity to players during play without the need to rely on cross-chain bridges to buy or trade tokens.

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

About Jimmie T.

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