The price of Axie Infinity has dropped, but the more important question is why the whales are buying in now. Since AXS broke through resistance on January 21, the price surged about 41% and is hovering near the resistance around 3.00 USD. This increase happened rapidly with almost no interruptions. However, there are now warning signs as the price has decreased more than 17% compared to the previous day, even though large investors are quietly buying more.
This situation creates a clear conflict because even though large investors are coming back, signals from various charts suggest that the risk of a short-term correction is increasing.
Bearish Harami signals that buyers are starting to weaken after the price increase.
The first warning sign of this 24-hour drop comes from AXS's daily candlestick structure. A bearish harami pattern occurred near the most recent highs. The bearish harami occurs when a small red candlestick forms within the body of a strong previous green candlestick, indicating that buyers are losing momentum while sellers begin to pressurize the price.
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This pattern is important because Axie Infinity has shown similar characteristics before. Previously, on January 18, a similar bearish harami occurred after a strong upward movement, and the following day saw a correction with AXS dropping nearly 26% as buyers slowed their purchases while sellers took profits at high prices.
Therefore, there is a possibility that a major drop is coming, especially now that AXS has dropped 17% in the past 24 hours after a 41% price surge, reflecting that the strength of the uptrend is starting to wane, at least in the short term.
Whales are back to buy again, are they being too optimistic?
On-chain data reveals that something has changed. Whales of Axie Infinity had reduced their holdings earlier when the market was rising. This selling pressure is evident in Santiment's data and occurred alongside the gradually increasing price. This confirms that whales are likely to take advantage of the 220% month-over-month price increase of Axie Infinity to sell for profit from previously loss-making positions.
But currently, that behavior has changed.
Since January 22, whale wallets have increased their holdings from approximately 243.78 million AXS to about 243.94 million AXS, an increase of approximately 160,000 tokens. At the current price, the trading value is around 430,000 USD.
This data suggests that the whales are no longer using the opportunity during the price surge to exit the market, but they are positioning themselves more firmly.
This thus helps bolster buying power in the market at the moment. However, it does not eliminate the short-term risks posed by the bearish harami candlestick pattern that has already begun a correction trend earlier.
Data on coin flows in exchanges also confirms this mixed picture: on January 15, Axie Infinity saw an inflow of coins into exchanges of about 4.07 million tokens, which clearly signals selling pressure. However, just three days later, on January 18, the flow turned sharply negative, with approximately 465,000 tokens exiting the exchanges, indicating strong buying demand.
On January 24, the outflow of coins from exchanges decreased to approximately 112,000 tokens. Thus, while the buying group still dominates the market, demand has weakened compared to before. While some are starting to take profits, a group of whales is still choosing to buy more, but are these whales making the right decision?
The difference between MFI and AXS price is a decisive factor.
The momentum index still supports caution, with the Money Flow Index, which reflects buying and selling pressure from price and volume, continuing to decline, even though from January 17 to 23, the price rose to 2.71 USD.
Data reflects that buying when prices are low is not as strong as during the early stages of the market upturn, and the price of AXS is beginning to decline. Meanwhile, short-term support is minimal, putting further pressure on the price to drop.
From a price perspective, important levels have become points to watch closely. In an upward direction, Axie Infinity needs to recover and hold above 3.00 USD (which is a key psychological level that was previously rejected). After that, it must clearly break through 3.11 USD. If it can decisively break through 3.11 USD, the path to 4.02 USD may open up again.
But the situation did not turn out that way.
Conversely, 2.54 USD has become an important support level, aligning with the 0.618 Fibonacci retracement and previously being a zone of strong response in the past. When AXS dropped below 2.54 USD, the correction process began.
The correction could go as deep as 2.20 USD or even touch 1.98 USD, which would further entrap the whales.
Although whales are buying, the momentum is weakening, with buyers still controlling the market. However, they are no longer as aggressive as before.
If Axie Infinity can hold above 2.54 USD again and regain momentum, a new upward movement could continue. However, if not, the market may need to correct deeper before returning to the next uptrend.