Axie Infinity’s AXS token appears positioned for a major relief rally as nearly all holders remain deeply underwater following the cryptocurrency’s steep decline this year.
According to crypto trader Ali, an astounding 98.67% of AXS holders are currently “out of the money,” meaning they purchased the token at higher prices than the current trading level. This extreme capitulation indicates selling pressure may be largely exhausted.
AXS has plunged from all-time highs above $165 to trade around $4.6 recently, an over 97% drop. The brutal decline has wiped out gains for essentially all investors except those who bought at the absolute bottom.
However, Ali believes this dire sentiment sets the stage for a significant reversal once selling fatigue fully sets in. He points to AXS forming an important support level around $4 after repeatedly defending that zone.
As a blockchain-based game focused on non-fungible token (NFT) creatures called Axies, Axie Infinity benefited tremendously from the NFT mania in 2021. Its token skyrocketed 32,000% that year.
But the NFT marketdown and crypto winter of 2022 wiped out nearly all those gains. With many disillusioned investors capitulating, Axie Infinity seems poised for a sentiment-fueled recovery rally.
According to Ali, the ingredients are there – extreme negative sentiment, exhausted selling pressure, established support, and skepticism that precludes excessive optimism.
Of course, Axie Infinity faces stiff challenges regaining traction in competitive gaming and NFT markets. But heavily oversold assets often bounce strongly, making AXS an alluring contrarian bet for bold investors willing to bottom-fish after such an epic decline.
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