AXS, the native token of Axie Infinity, a play-to-earn nonfungible token (NFT) recreation constructed atop the Ethereum blockchain, rallied greater than 100% on a quarter-to-date (QTD) timeframe to refresh a brand new document excessive above $155.

Nonetheless, the cryptocurrency now dangers paring a portion of its current positive aspects as a key technical indicator, dubbed the relative power index (RSI), flashes its overbought situations. In doing so, it’d right beneath $90 — nearly a 40% drop.

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The bearish outlook surfaces after learning the connection between AXS’s value and its RSI readings. Intimately, when the RSI rallies above 70, it largely prompts AXS to both consolidate sideways or decrease later.

However in both case, the token finally ends up testing its 20-day exponential transferring common (20-day EMA; the inexperienced wave within the chart beneath) as an interim assist stage.

AXS/USD day by day value chart that includes its response to RSI readings above 70. Supply: TradingView

As an example, RSI has closed above 70 3 times since July 1, 2021, and every time prompted the value to hit its 20-day EMA inside seven to 30 days. That made shopping for AXS against an overbought RSI studying a dangerous preposition for merchants, growing their likelihood of going through short-term losses.

In consequence, the Axie Infinity token might undergo an analogous bearish trajectory within the days/weeks forward, with its subsequent draw back goal sitting round $87. Nonetheless, if the value rallies additional forward, as occurred after July’s overbought sign, AXS’s bearish goal might transfer to or above $90.

Is hodling a greater technique?

The 20-day EMA served as a purchase indicator for merchants following the RSI-led corrections. Intimately, merchants determined to purchase the dip in anticipation that AXS’s value would retest and shut above its earlier excessive ranges.

Due to this fact, it’s seen that merchants who didn’t promote their AXS holdings throughout the value corrections towards the 20-day EMA managed to earn respectable paper income — the Axie Infinity token has climbed greater than 2,500% since July 1.

AXS’s rising utility contained in the Axie Infinity digital world, referred to as Lunacia, has emerged as one of many major catalysts behind its demand amongst players and merchants. Intimately, gamers maneuver colourful creatures referred to as Axies to earn two sorts of tokens.

The primary, often known as Small Love Potions (SLP), is awarded for profitable battles; it may be cashed out or be reused to breed new Axies. In the meantime, the second token, AXS, could be earned by successful seasonal tournaments or promoting Axies in Axie Infinity’s devoted in-house market.

As of Monday, Axie Infinity’s energetic consumer depend tallied to 1.85 million, up over 4,500% since April, with its whole cumulative income climbing to $815 million in the identical interval, as per Token Terminal. That made Sky Marvis, the agency behind Axie Infinity, the fifth-most useful online game firm globally by market capitalization.

Prime gaming corporations on the planet. Supply: Messari

The sturdy fundamentals have intensified merchants’ confidence in AXS, which explains its capability to bounce again each time after present process a pointy correction towards its 20-day EMA.

AXS staking service, DEX launch

The newest bout of shopping for within the Axie Infinity markets additionally surfaced resulting from a new feature that enables AXS holders to stake their tokens to earn yields. Since its launch on Thursday, the staking function has attracted more than 12.44 million AXS tokens (~$1.88 billion at present charges).

AXS staking dashboard. Supply: Axie Infinity

Staking successfully takes energetic token provide out of circulation, which, in opposition to a rising demand for the asset, tends to push its costs larger. 

Associated: Massive airdrop and AXS staking catapult Axie Infinity to a new all-time high

In the meantime, Sky Mavis introduced that it could launch a decentralized trade on Ethereum-linked sidechain Ronin. In doing so, the corporate goals to make sure quicker AXS and SLP liquidity to gamers throughout gameplay while not having to depend on cross-chain bridges to buy or swap tokens.

The views and opinions expressed listed here are solely these of the writer and don’t essentially replicate the views of Cointelegraph.com. Each funding and buying and selling transfer entails danger, you need to conduct your personal analysis when making a call.