Is the price of Axie Infinity (AXS) headed for a new 2-year low?

Axie Infinity (AXS) price failed to regain the $5 level despite the positive sentiment surrounding the altcoin markets at the end of September. Historical on-chain data provides insights into how AXS price may perform in the coming weeks.

Axie Infinity will conduct its next token unlock on October 20th. Here’s how key stakeholders in the AXS markets are positioning their trades ahead of the upcoming milestone event.

Crypto Whales Started Download Axie Infinity Ahead October 20 Token Unlock

According to a recent Beincrypto report, Axie Infinity will have the largest crypto token unlock event in October 2023. The long-awaited event will release 15.13 million AXS (~$69 million) into circulation.

Interestingly, crypto whales holding 100,000 to 1 million AXS have started offloading their balances to get ahead of the potential inflationary pressure.

The chart below shows that they held a total of 34.66 million AXS in their wallets as of October 2nd. But barely 3 days later they are now down to 34.2 million tokens.

This implies that they have already sold 460,000 AXS tokens worth approximately $2.07 million this week. Strikingly, this reflects the bearish precedence set during the previous token unlock on July 22, 2023.

The chart shows how the whales sold 1.85 million AXS between July 5th and July 21st. While the crypto market boom after Ripple’s (XRP) infamous victory stepped over the cracks, AXS price still fell by 26% within 30 days of the July 22 token unlock.

Notably, the upcoming $70 million token unlock event is four times larger than the previous one. As a result, other stakeholders in the Axie Infinity ecosystem are likely to join the bearish action in the coming weeks.

Speculative traders quickly close their AXS positions

Confirming the bearish outlook, AXS Futures traders were seen closing their positions quickly this week.

Derivative data analysis platform Coinalyze reports that AXS Open Interest stood at $50.4 million on September 15. That figure has since fallen by a staggering 49% to 26 million million on October 5.

This implies that Axie Infinity has $46 million in capital outflows in the perpetual futures markets within the last three weeks.

Open interest values ​​the total outstanding derivative contracts for an asset across recognized trading platforms. Strategic investors often interpret such a sharp downward trend in Open Interest as a bearish signal.

This suggests that existing AXS traders are closing their positions faster than those bringing in fresh capital.

In summary, if the speculative traders and whale investors’ historically bearish trends continue, it is only a matter of time before AXS price drops to new lows.

AXS Price Prediction: The loss of the $4 support could catalyze bigger losses

From an on-chain perspective, the October 20th token unlock will likely drive the Axie Infinity price into a downturn towards $4.

The Global In/Out of the Money (GIOM) chart, which depicts the entry price spread of current AXS holders, also supports this bearish forecast. This shows that if AXS loses vital support at $4, it could catalyze historic losses.

As seen below, 283 addresses bought 57,420 AXS at an average price of $4.04. Since this is the last major line of support, they will likely make frantic efforts to HODL.

But if the whales continue to sell and the $4 support caves in, AXS price could drop closer to zero.

Alternatively, the bulls could invalidate that bullish story if Axie can reclaim Infinity’s $7 price. But that seems unlikely right now, as 12,110 addresses bought 27.8 million AXS at an average price of $6.

If they sell to avoid the inflationary impact of the upcoming token unlock, AXS price is likely to bounce back.

But if that resistance level caves in, Axie Infinity could rise to the $7 range.