Axie Infinity (AXS) has been forming a giant bearish reversal pattern since July last year, which could see its prices drop another 95% in 2022.
AXS risks one big breakdown
Called the “inverted cup and handle,” this pattern is identified by the shape of a large crescent moon followed by a modest upward correction. It usually resolves after the price breaks out of the rising channel, followed by another break below the cup-and-handle support of the neck line.
Meanwhile, as a rule of technical analysis, a breakout of an inverted cup with a handle brings the price to a level at a length equal to the maximum distance between the top of the structure and support.
The rise in AXS prices in the second half of 2021, followed by its complete disappearance in 2022, forms a crescent-shaped trend that looks like an inverted bowl. Additionally, the recent 50% bounce off the June 18 local low at $11.82 forms an inverted handle as shown below.
As such, AXS technicals appear to be skewed to the downside as it breaks below the inverted handle range with a $1 breakout target, about 95% below today’s price.
Bad press hurt Axie Infinity
The extreme bearish forecast primarily appears on the wave of a depressive trend in other parts of the crypto market. However, AXS is also suffering from Axie Infinity’s crumbling vision of supporting a gaming platform that pays the user to play.
In addition, bad press, including the $600 million hack earlier this year, has also reduced demand for AXS, which serves as a governance token and legal tender in the Axie Infinity ecosystem.
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This can be seen in Axie’s monthly revenue, which has fallen over 98% from its peak of $364.4 million in August 2021, according to data tracked by Token Terminal.
But Axie Infinity may not be completely gone, argues Cryptooshala’s Ianto Chandra in an editorial, noting that the project will “reinvent itself and chart a new destiny in the rapidly changing GameFi landscape.”
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Credit : cointelegraph.com