The price of Axie Infinity’s native token AXS surged on Wednesday despite a lackluster upward momentum elsewhere in the cryptocurrency market.
The AXS/USD pair rose to as much as $44.96 following a 16.44% intraday jump. Nonetheless, the strong upside move came as a part of a sideways trend that saw AXS fluctuating inside the $36.48-$56.57 price range, hinting that traders placed speculative upside bets on the token.
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.”
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.
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.
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.
Related: Axie Infinity refreshes record high as AXS ascends 131% in just 3 days
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.