Analyzing Axie Infinity’s [AXS] case for the bulls and what to prepare for

Analyzing Axie Infinity's [AXS] case for the bulls and what to prepare for

AXS registered an explosive run in 2021, and managed to secure a spot among the best-performing cryptocurrencies in 2021. However, it has seen a significant sell-off from its September peak and some of its metrics suggest that it might be ready for a bullish breakout.

Evaluating AXS’s historic performance will help reveal why bulls might favor the cryptourrency in the next few weeks or months. AXS traded as low as $0.41 in January 2021 and this was its lowest price level during the year. It peaked at $166 in November of the same year, which means it rallied by slightly higher than 40,000% to its ATH.

AXS’s bearish performance from its ATH to its lowest point in 2022 reveals that it got drawn down by 74% from its peak. Fibonnacci retracement during this period highlights resistance near the 0.23 Fibonacci level during the March bullish correction. It corresponds with the $72 price level where resistance has been tested multiple times so far in 2022.

AXS’ latest price action presented a more interesting scenario where it found support near the $43 to $45 price range. The latter is an essential price level because it highlights a floor price on which the cryptocurrency has bounced back multiple times.

Strong accumulation near the $43 to $45 price range translates to the bears losing momentum, paving way for the bulls to take over.

This expectation seems to align with AXS’ on-chain metrics which currently highlight activity consistent with bullish expectations. For example, the cryptocurrency’s supply on exchanges has taken a dive in the last two weeks, a sign of accumulation at lower prices.

Positive supply metrics

ASX supply held by top non-exchange addresses had a sharp drop towards the end of March as the market cap increased. The divergence yielded a strong reversal in the last two weeks but the opposite has been observed in the last few days. We observe a marginal increase in supply held by top exchanges in the second week of April compared to the first as market cap dropped.