Axie Infinity ($AXS) price dipped below the critical $6 support level on Wednesday, August 2. On-chain data analysis reveals the critical factors behind the growing bearish momentum.
Like most GameFi projects in the top 50 crypto rankings, Axie Infinity ($AXS) has delivered an underwhelming performance in 2023. Since the price surge that followed the much-heralded AxiETH gaming event hosted in Thailand, $AXS is now struggling to attract new players.
Will this worsen the bearish $AXS price momentum in the coming days?
The Number of New Users Joining Axie Infinity is Dwindling Fast
After a significant uptick in July, Axie Infinity has been struggling to attract new users to its GameFi ecosystem in the past week. According to data from Santiment, 345 new $AXS wallet addresses were created on July 21. But at the close of Aug 2, the $AXS Network Growth has now dwindled to just 75 new addresses.
This 78% decline in Network Growth suggests that a bearish momentum is growing within the Axie Infinity ecosystem.
Network Growth evaluates the daily number of new wallet addresses created on a blockchain network. This provides insight into the rate at which the ecosystem attracts new joiners.
A drop in Network Growth means that the underlying $AXS tokens could struggle to find new demand in the coming days. Worryingly, this could further worsen the current bearish momentum and push $AXS price further downward.
Long-term Investors are Exiting Amid Mounting Losses
With the price currently sitting at $5.90, $AXS is down 58% from its 2023 peak of $13.94 recorded back in January. Amid the mounting double-digit losses, Axie Infinity’s long-term investors are now losing confidence.
Indicatively, $AXS Mean Coin Age has declined considerably between July 25 and August 2. The red line in the chart below illustrates how it declined by 65% from 42.73 to 15.14 within the past week.
Mean Coin Age gauges the long-term investors’ confidence by calculating the average number of days that coins in circulation have spent in their current wallet addresses.
When it drops during a price rally, as seen above, it indicates that long-held tokens are on the move. By extension, this means $AXS long-term investors are now exiting their positions as hopes of a potential rebound remain bleak.
In conclusion, the dwindling network growth and rising bearish momentum among long-term $AXS holders will likely cause further $AXS price corrections in the coming weeks.
$AXS Price Prediction: Possible Bearish Reversal Toward $5
According to IntoTheBlock’s In/Out of Money Around Price (IOMAP) data, the growing bearish momentum will likely push $AXS toward $5. As shown below, 2,260 addresses bought 24.81 tokens at the minimum price of $5.76. This is the only significant supply wall between $AXS bears and the $5 price target.
If the $AXS bearish momentum grows as predicted, the price could drop as low as $4.50.
Still, if the long-investors decide to cut their losses and stop selling, the bulls could force a rebound toward $7. But, 10,170 addresses that bought 103.2 million $AXS tokens at the minimum price of $6.12 could pose significant resistance.
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