AXL in trouble? on-chain metrics point to potential losses

AXL’s recent price decline shows no signs of easing, and on-chain metrics indicate that the crypto asset will face more trouble ahead.

Axelar, a programmable blockchain interoperability platform codenamed AXL, has fallen to $0.6152 for three consecutive days at press time, dropping its market cap to $552 million. The altcoin has been in a downtrend since December 16, when its price dropped 40% and its monthly loss was 27.8%.

Several on-chain metrics indicate that the asset may face further downward pressure in the coming days.

Axelar’s DeFi ecosystem, in particular, lost a large portion of its total value locked up last month. According to DeFiLlama data, since December 18, the project’s TVL has decreased from $367 million to $254 million. This is a sign that user activity is decreasing and investor confidence is waning.

Additionally, AXL investors have been increasingly moving their assets to exchanges over the past week, according to data from CoinGlass. Increased foreign exchange net flows could lead to a price correction in the short term, as investors may seek to cash out or shift funds to other projects due to reduced confidence in the project.

AXL predominant sensitivity | Source: Santiment

Social perception surrounding the altcoin has also trended downward; The weighted sentiment is currently at -0.818, underlining the growing pessimism among investors.

Additionally, demand among altcoin derivative investors has decreased in the last five days. According to CoinGlass, open interest in AXL futures had fallen from $19.9 million on December 4 to $10.44 million at the time of this writing.

Another factor contributing to AXL’s recent decline is the prevailing risk aversion sentiment caused by the Federal Reserve’s hawkish stance on interest rate cuts and rising US bond yields, which has plagued both traditional and crypto markets. Bitcoin’s (BTC) recent drop below $100,000 has further intensified losses in the altcoin market, where volatility and downside risk are often more pronounced.

Bearish technical data AXL price, PPO and MACD chart — January 9 | Source: crypto.news

On the 1-day AXL/USD price chart, the Moving Average Convergence Divergence indicator showed that the MACD line (blue) crossed below the signal line (orange), indicating that the price has returned to a downtrend in the short term. This is further confirmed by the fact that both lines of the price oscillator are pointing down and the Supertrend line is above the price at the time of writing.

AXL Supertrend and CMF chart — January 9 | Source: crypto.news

Additionally, the Chaikin Money Flow Index showed a reading of -0.11; This indicates a slight downward trend as selling activity slightly exceeds buying pressure in the market.

Large conservative net flow in last 7 days | Source: IntoTheBlock

However, with whales increasing interest in AXL at current price levels, the token may find some relief. Between January 6 and January 8, whale wallet inflows increased from 128.48 thousand tokens to 2.59 million. Since whale investments are often perceived as a bullish signal, retail investors can follow suit.

Additionally, if Bitcoin mounts a strong rebound from recent losses ahead of President-elect Donald Trump’s inauguration in late January, the altcoin could rebound.