While the crypto market remains gripped by fears of global volatility, Axie Infinity (AXS) has emerged as an unexpected bright spot. The AXS token rebounded sharply and rose above $2.4, erasing all losses from last October’s decline.
The key question is whether this rise can be sustained. Multidimensional data provides a more objective perspective for investors.
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What’s driving Axie Infinity’s (AXS) January rally?
AXS has soared more than 200% since the beginning of the year, according to the latest data from BeInCrypto Price. The daily trading volume exceeded $1 billion.
The rally began after the project’s founders announced plans to migrate Axie Infinity’s AXS rewards to an app token version of AXS known as bAXS. Players can use bAXS within Axie Core and stake it to receive additional rewards.
Surprisingly, AXS’s rally didn’t end anytime soon. It was extended for another week despite widespread market correction during the same period.
CoinGecko’s data highlights another important factor. Korean traders play a major role in providing liquidity. Their enthusiasm pushed AXS above the $2.4 level.
Of the more than $1 billion in daily trading volume, Upbit alone accounted for more than $320 million, or 32%. Upbit’s price also trades at a premium compared to Binance and other exchanges. This suggests that South Korean traders are willing to pay higher prices, driven by expectations of further upside.
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Additionally, a recent BeInCrypto report points to renewed interest in the GameFi project. Investors appear to be looking back and reallocating capital to GameFi tokens that were once considered forgotten.
“Nostalgia is the most powerful emotion in the universe. No other crypto IP can make people feel both nostalgic for the past and excited for the future. That’s where Axie’s genius lies.” — Jihoz.ron, co-founder of Axie Infinity.
Warning signals that could threaten AXS Rally
AXS’s rise relative to broader market trends has sparked skepticism among some analysts. In the crypto market, internal enthusiasm can overwhelm external fear.
However, behind this spectacular price increase lies a problem with on-chain signals. AXS balances on the exchange increased along with the price. This indicates that more tokens are becoming available, potentially creating selling pressure.
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The recent BeInCrypto report also shows that the 7-day average number of transactions for deposits has reached its highest level in three years. On-chain data reveals that several large balance wallets have recently transferred AXS to Binance.
As long as buying pressure is strong, these inflows could be quickly absorbed. The trend could reverse if demand weakens.
Another factor worth considering is the lack of new player growth on Axie Infinity’s core platform, the Ronin network.
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Ronin’s Dune Analytics data shows fewer than 10,000 new active addresses each week. This number has significantly decreased from more than 500,000 in 2024, and there are no clear signs of recovery.
The lack of meaningful user base growth reflects the saturation of the play-to-earn model. This model once attracted millions of players during the pandemic. Without a new influx of users, AXS’ recovery could face structural challenges.
Furthermore, open interest in AXS futures contracts exceeded $130 million, the highest level in three years. The surge highlights increased speculative activity, with investors using leverage to bet on price movements.
High open interest often means increased liquidation risk, especially in volatile market environments. This environment increases the likelihood of cascading liquidations and could cause AXS prices to fall significantly.
How long the AXS rally lasts will depend on whether positive catalysts can outweigh the warning signals highlighted above. As markets continue to face unexpected increases in volatility, trading in the current environment requires careful balancing of multiple factors to reduce risk.
