AXS jumped 13% – But volume dropped 5%, and that’s a problem

Axie Infinity [AXS] has had a significant spike in the past day as the price added a 13% gain within the past 24 hours. The gain has been an effect of the buyers’ momentum in the market, which has pushed the price further upwards.

However, concerns remain over whether the asset would see an upswing in the near term, especially given its volume performance. According to CoinMarketCap, the volume has declined by roughly 5% in the past day to $146 million at the time of this writing.

Price and volume maintain a relationship that has helped in predicting price direction. When volume is dropping while price is rising, as in this case, it simply suggests that the present bullish momentum is weak.

Spot and perpetual markets show rising selling pressure

The surge has seen combined selling pressure from both the Spot and perpetual markets at the same time.

In the Spot market, there has been a sell-off of roughly $8.42 million as traders moved more AXS into exchanges than was moved out. This has since placed the Spot flow in the positive region of $1.23 million.

When the Spot netflow is positive, it implies that traders are selling more than they’re accumulating, which could weigh on the long-term performance eventually.

Given that the previous day was negative, indicating accumulation, this suggests that the current movement could be a profit-taking exercise.

The perpetual market activity has shown the same selling pressure as the Open Interest-Weighted Funding Rate turned significantly negative, dropping to around -0.0565%. This suggests that there has been a strong positioning from short traders in the market.

Whenever this metric is negative, it suggests that the majority of positions in an asset’s perpetual market, in this case $48.12 million, are short positions, which could influence the market direction for AXS.

For now, this pattern is signaling weakness in the price structure and the tendency for the price to eventually succumb to the downside.

Market sentiment keeps AXS on a bullish trajectory

The clearest reason why AXS has been on the high side has been the sentiment and mindshare factor in the market. Presently, there has been a surge in mindshare to roughly 26%, while sentiment remained at roughly 5.46 on the chart.

A reading such as this on the sentiment chart suggests that most investors are bullish, especially given that sentiment oscillates between -10 and 10 on the chart. When sentiment is bullish, combined with growing discussion of the asset across the market, it could induce FOMO buying and add to the asset’s overall performance.

Overall, the effect of sentiment can’t be eliminated from the market, as when traders’ conviction around an asset is this high, it eventually impacts its performance in the long run.

Final Summary

• AXS’s 13% price surge faces weakening momentum as trading volume declines and selling pressure rises across Spot and perpetual markets.
• Negative Funding Rates and stronger market sentiment could shape AXS’s next price move as traders assess the sustainability of the rally.