- Altcoin resumed its decline, closing in on a month-long consolidation range it previously broke out of.
- Technical Indicators Reveal a Strongly Bearish Market
After a slow week, in which the altcoin fell by 15.22%, the AXS market bulls have made a comeback. Their efforts sent the asset up 10.22% in the last 24 hours, providing a glimmer of hope.
However, further analysis from AMBCrypto suggested that Axie Infinity (AXS) remained bearish at press time. In fact, the current downturn could get worse, with the altcoin likely to fall further down the charts.
A return to consolidation
AXS has been on a steep decline lately, losing 48.67% of its value between December 4 and December 20. Its latest daily gains followed a rebound off a resistance zone, now acting as support. At the time of writing, the altcoin appeared to be heading back towards the lower consolidation range.
However, this rebound brought AXS into a supply zone between $6.78 and $7.156, where strong selling pressure could push the price lower.
AMBCrypto’s analysis suggests that if selling pressure intensifies, AXS could re-enter the consolidation phase it left in November, leading to further price declines.
Source: Commercial View
On the other hand, if the supply zone does not hold, the asset could move up to another higher supply zone before resuming its downward trajectory.
AMBCrypto technical analysis reaffirmed the prevailing downtrend, highlighting continued market weakness.
The bears take control
At press time, AXS remained under significant downward pressure. The Bull Bear Power (BBP) indicator, which gauges market control, showed that market declines were behind the current price decline.
Momentum indicators also revealed a sharp increase in selling activity, with the momentum bar hitting its lowest level since April 2022. This downward trend continued with the bar dropping further.
Source: Commercial View
Likewise, the Parabolic SAR (Stop and Reverse) indicator formed above the asset price, marked by dotted markets on the chart. This formation hinted at intense selling pressure, suggesting further decline in AXS price.
If these indicators maintain their current trajectory, the downward movement from the supply zone could accelerate, leading to even steeper price declines.
Selling pressure from derivatives traders
Finally, derivatives traders are increasingly selling their AXS positions, as the funding rate and open interest have started to decline.
The funding rate, which measures market control through periodic fees paid to maintain price levels in cash and derivatives markets, indicates that short sellers dominate.
In fact, the funding rate fell into negative territory with a reading of -0.0253% – a sign of bearish market sentiment.
Source: Coinglass
Additionally, open interest also declined, falling 2.53% to $56.12 million. This decline suggests that short contracts now outnumber long positions, potentially amplifying the downward pressure on AXS’s price.
If these trends persist, the downward momentum in the derivatives market could further depress the value of the asset.
