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After double-digit gains in June, Axie Infinity’s (AXS) price dropped to $5.80 following an unsuccessful attempt at the $6.50 resistance. On-chain data suggests that the bears are on the verge of breaking the $5.80 support.
Axie Infinity performed fairly well in June as the markets reacted positively to the just concluded AxieTH World Battle gaming tournament. However, on-chain data suggest that the bears are now poised to seize the momentum.
Axie Infinity Players Go Missing in Action
User activity across the Axie Infinity GameFi ecosystem has been in a steep decline since the start of July. According to Santiment data, AXS attracted 400 Active Addresses on July 1. But, by the close of July 10, that figure had dwindled 21% toward 316.
Daily Active Addresses evaluates changes in user activity by counting the daily number of unique wallet addresses carrying out transactions. When it drops drastically, it indicates that the underlying token may struggle to find new demand.
If Axie Infinity user activity continues to drop, the bears could break the $5.80 AXS price support in the coming days.
AXS Support Weakens as Investor Demand Drops
Furthermore, the dwindling investor demand for AXS confirms the bearish projection that it could struggle to defend the $5.80 price support.
As things stand, potential investors have only placed orders to buy 617,000 AXS tokens. Meanwhile, the bears have piled on active orders across top crypto exchanges to sell a whopping 694,000 tokens.
The chart above shows an excess market supply of more than 77,000 AXS tokens. When the supply of an asset exceeds demand by such a significant margin, it puts downward pressure on price.
In conclusion, the dwindling user activity suggests that Axie Infinity is unlikely to attract sufficient demand to hold the $5.80 price support. Hence, AXS holders can anticipate further price downswings in the coming days.
AXS Price Prediction: Potential Retracement Toward $5
Given the abovementioned factors, the AXS bears will likely force a pullback below the current $5.80 price support.
However, the bulls will offer some support at around $5.50. At that zone, 148,000 investors that bought 4 million AXS tokens at the minimum price of $5.57 could prevent the drop.
But if bearish momentum strengthens as expected, AXS could eventually drop toward the next significant support level at $4.90.
Still, bulls could push ahead with the rally if Axie Infinity’s price rebounds above $6. However, 9,740 investors that bought 125.4 million AXS tokens at the minimum price of $6 could trigger a pullback.
But if the resistance level does not hold, then AXS could reclaim $8 for the first time since April 2023.