Axie Infinity Revives Amid Market Fear, but Multiple Data Points Raise Warnings

While the cryptocurrency market remains gripped by fear due to global volatility, Axie Infinity (AXS) has unexpectedly emerged as a bright spot. The AXS token rebounded sharply, climbing above $2.4 and erasing all losses from last year’s October sell-off.

The key question is whether this rally can sustain itself. Multi-dimensional data offers a more objective view for investors.

What Is Driving Axie Infinity’s (AXS) Rally in January?

Latest data from BeInCrypto Price shows that AXS has surged more than 200% since the start of the year. Daily trading volume has exceeded $1 billion.

The rally began after the project’s founder announced a plan to transition AXS rewards in Axie Infinity into an app-token version of AXS, known as bAXS. Players can use bAXS within Axie Core and stake it to receive additional benefits.

AXS Price Performance Over The Past Three Months. Source: BeInCrypto Price

Surprisingly, the AXS rally did not end quickly. It extended for another week, despite a broader market correction during the same period.

Data from CoinGecko highlights another important driver. South Korean traders are playing a major role in providing liquidity. Their enthusiasm pushed AXS above the $2.4 level.

AXS Trading Volume Across Exchanges. Source: CoinGecko

Of the more than $1 billion in daily trading volume, Upbit alone accounted for over $320 million, or more than 32%. Prices on Upbit also traded at a premium compared to Binance and other exchanges. This suggests that South Korean traders are willing to pay higher prices, driven by expectations of further upside.

In addition, a recent BeInCrypto report points to renewed interest in GameFi projects. Investors appear to be revisiting the past and reallocating capital into GameFi tokens that were once considered forgotten.

“Nostalgia is the most powerful emotion in the universe. There’s no other IP in crypto that can make people feel both nostalgic for the past and excited for the future. That’s the zone of genius where Axie lives.” — Jihoz.ron, Co-founder of Axie Infinity, said.

Warning Signals That Could Threaten the AXS Rally

AXS’s rally against the broader market trend has raised skepticism among some analysts. In crypto markets, internal enthusiasm can sometimes overpower external fear.

However, behind the impressive price surge lie concerning on-chain signals. AXS balances on exchanges have increased alongside the price. This indicates that more tokens are becoming available, potentially creating selling pressure.

Axie Infinity Exchange Reserve. Source: CryptoQuant

A recent BeInCrypto report also shows that the seven-day average transaction count for deposits has reached its highest level in three years. On-chain data reveals that several large-balance wallets have recently transferred AXS to Binance.

As long as buying pressure remains strong, these inflows can be absorbed quickly. Once demand weakens, the trend could reverse.

Another factor worth considering is the lack of growth in new players on the Ronin network, Axie Infinity’s core platform.

Weekly Active Addresses on Ronin Network. Source: Dune/Ronin

Dune Analytics data for Ronin shows that weekly new active addresses remain below 10,000. This figure has fallen sharply from more than 500,000 in 2024 and shows no clear signs of recovery.

The absence of meaningful user base expansion reflects saturation in the play-to-earn model. This model once attracted millions of players during the pandemic. Without a fresh inflow of users, AXS’s recovery could face structural challenges.

In addition, open interest in AXS futures contracts has exceeded $130 million, the highest level in three years. This surge highlights elevated speculative activity, with investors using leverage to bet on price movements.

Axie Infinity Open Interest. Source: CoinGlass

High open interest often implies elevated liquidation risk, especially in volatile market conditions. This environment increases the likelihood of cascading liquidations, which could send AXS prices sharply lower.

How long the AXS rally can last depends on whether positive catalysts can outweigh the warning signals highlighted above. Trading in the current environment requires careful balancing of multiple factors to mitigate risk, as the market continues to face unexpected and heightened volatility.