Is a Return to Stability on the Horizon?
After facing a significant 15.22% decline over the past week, the market bulls for AXS have managed to stage a comeback. This push resulted in a 10.22% increase in the asset’s value within the last 24 hours, signaling a ray of hope amidst recent setbacks.
Nevertheless, a recent analysis by CryptoCrypto indicates that Axie Infinity [AXS] remains bearish as of now. The current downward trend might persist, potentially leading to further declines in the altcoin’s price.
Following a steep decrease of 48.67% from December 4th to December 20th, AXS has recently shown a bounce off a resistance level that now serves as support. Presently, the altcoin appears to be moving back towards the lower end of a consolidation range.
Despite this rebound, AXS finds itself in a supply zone valued between $6.78 and $7.156, where strong selling pressure might drive prices down.
CryptoCrypto’s assessment hints that with intensified selling pressure, AXS could re-enter the consolidation phase it left behind in November, resulting in further price corrections.
Conversely, if the current supply zone fails to hold, the asset may climb to a higher supply region before potentially resuming its downtrend.
Amidst this analysis, CryptoCrypto’s technical evaluation underlines the prevailing bearish sentiment, underscoring ongoing weaknesses in the market.
Bearish Trends Taking Hold
Presently, AXS continues to face considerable bearish pressure. The Bull Bear Power (BBP) indicator, designed to gauge market dominance, indicates that bears are steering the current price decline.
Momentum indicators also reveal a notable uptick in selling pressure, with the momentum bar hitting its lowest level since April 2022, followed by a further decline.
Additionally, the Parabolic SAR (Stop and Reverse) indicator has formed above the asset’s price, with dotted indicators appearing on the chart. This formation suggests strong selling pressure and implies a potential price downturn for AXS.
Should these indicators persist in their current trajectories, the descent from the supply zone could accelerate, resulting in more pronounced price dips.
Impact of Derivatives Traders’ Selling Pressure
There has been a noticeable increase in derivative traders divesting their AXS holdings, indicated by a decline in both Funding Rate and Open Interest.
The Funding Rate, which assesses market control by tracking periodic fees paid to manage price levels across spot and derivative markets, implies a dominance of short sellers.
With a reading of -0.0253%, the Funding Rate has dipped into negative figures, reflecting a bearish market sentiment.
Moreover, Open Interest has decreased by 2.53% to $56.12 million, indicating a shift towards short contracts over long positions, potentially amplifying downward pressure on AXS’s value.
Should these trends persist, the bearish momentum in the derivatives market could exacerbate the asset’s price decline.