Play-to-earn giant Axie Infinity’s AXS cryptocurrency is rallying despite the impending unlocking of millions of dollars worth of tokens.
AXS has gained over 40% in the past 24 hours, reaching a four-month high of $13.94.
The dollar value locked in the number of open contracts in perpetual futures tied to AXS has soared by 156% to $104 million in the past 24 hours. An increase in open interest alongside a price rally indicates an influx of new money on the bullish side.
Axie Infinity is a blockchain-based trading and battling game that allows players to collect, breed, raise battle, and trade token-based creatures known as “axies,” which are digitized as non-fungible tokens (NFTs). Axie Infinity shards or AXS is a governance token of the Axie Infinity game.
The latest positive market action may seem to confound, as some 4.8 million AXS tokens ($64 million at the current price of $13.31) the equivalent of 1.8% of the cryptocurrency’s total supply of 270 million will be freed up later Monday.
Unlocks are considered bearish catalysts that free up liquidity and open doors for investors to lock in profits. Tokens are locked up to prevent the big bag holders – usually early investors or even the project’s team members – from selling their coins all at once and causing price dumps.
According to Flex Hartmann, managing partner at crypto investment firm Hartmann Capital, the confounding rally results from the hope that the Axie team will announce a positive catalyst to counteract the bearish impact of the token unlock.
Over the last 12 months, crypto teams have started building a track record for saving big announcements for unlock days. It’s happened so consistently that people now expect a bullish catalyst around unlocks.
“The market has become so reflexive that people buy in anticipation of unlock news,” Hartmann said, calling the new trend of releasing good news along with the token unlocks unethical.
Back then, a bull frenzy had gripped the market with bitcoin hitting new record highs almost every other week. The market has seen a bull revival this month, with leading cryptocurrencies bitcoin and ether rallying 35% each.
AXS has gained over 100% this month, topping the 200-day simple moving average for the first time since 2020. The bull revival is yet to rekindle interest in the gaming platform.