AXS, the native token of Axie Infinity, the win-play NFT game built on the Ethereum blockchain, has set a new record. In the early days of the fourth quarter, it appreciated more than 100 percent at $ 155.
However, profit-taking is likely to be observed as the cryptocurrency’s Relative Strength Index (RSI) indicator warns of overbought. In fact, a drop below $ 90, or nearly 40 percent, can be considered normal.
The bearish expectation becomes more apparent when examining the relationship between AXS price and RSI values. In general, AXS is expected to move sideways or consolidate at lower levels when the RSI rises above 70.
Either way, this token is testing its 20-day exponential moving average (20-day EMA; green line in the chart below) as a temporary support level.
The RSI value has closed above 70 three times since July 1, 2021, each time causing the price to drop to the 20-day EMA within 7 to 30 days. This has made buying AXS a risky action for traders despite the overbought RSI, making it more likely that you will face short-term losses.
As a result, the Axie Infinity token may go through a similar bearish phase in the next few days or weeks and its next downside target may be around $ 87. However, if the price rises further, as it did after the signal. From overbought in July, AXS’s bearish target could rise to $ 90 or more this time.
Is HODLing Instead Of Trading A Good Strategy?
The 20-day EMA and RSI values seem to signal traders to buy on the corrections. Traders are buying on the dips in anticipation that AXS price will test the bottom and close above its previous highs.
Therefore, traders who do not sell their AXS holdings during price adjustments to the 20-day EMA can be considered to be making reasonable profits. Because the Axie Infinity token is up more than 2,500 percent since July 1.
The increasing use of the virtual world, called Lunicia, on AXS ‘Axie Infinity platform is one of the main catalysts behind demand among players and merchants. Players use colorful creatures called Axies to earn two types of tokens.
Assets known as Small Love Potion (SLP) are awarded after successfully completed battles. These can be collected or used to create new Axies. Meanwhile, the second token, AXS, can be obtained by winning seasonal tournaments or by selling Axies on Axie Infinity’s private local market.
As of Monday, the number of active Axie Infinity users reached 1.85 million, an increase of more than 4,500 percent from April. Total cumulative revenue increased to $ 815 million during the same period, according to data from Token Terminal. This makes Sky Marvis, the firm behind Axie Infinity, the fifth most valuable video game company in the world by market capitalization.
Strong technical data has boosted traders’ confidence in AXS, pointing to a reversal maneuver whenever a strong correction forms towards the 20-day EMA.
AXS stakeout service and DEX opening
The strong buying period in the Axie Infinity markets has been triggered by the new feature that allows AXS holders to stake their tokens for profit. Since its launch on September 30, the share feature has unlocked more than 12.44 million AXS tokens. This equates to around $ 1.88 billion at current prices.
Staking removes the active supply of tokens from circulation, causing their prices to rise in response to increased demand for the asset.
Related: Axie Infinity (AXS) 2x in a Week as the Altcoin Market Drops
Meanwhile, Sky Mavis has announced that it will launch a decentralized exchange (DEX) on the Ethereum-linked Ronin sidechain. In doing so, the company aims to provide players with faster AXS and SLP liquidity during gameplay without having to rely on cross-chain bridges to buy or trade tokens.
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