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Upcoming Token Unlocks on Axie Infinity’s AXS Cryptocurrency Will Spur More Volatility

Token unlocks are often perceived as bearish catalysts in the cryptocurrency market. However, recent price fluctuations may be attributed to broader market volatility rather than just token unlocks. This article examines the upcoming token unlock event’s impact on Axie Infinity’s AXS cryptocurrency and its correlation with market trends, particularly in the play-to-earn and gaming sectors.

Axie Infinity’s AXS Performance in the Wake of Token Unlock Announcement

As of this writing, the AXS cryptocurrency is experiencing a decline in value, with the price at $8.22, reflecting a 12% drop over the week. AXS currently boasts a total valuation of $941.7 million, making it the third-largest player in the play-to-earn and gaming industry, following Decentraland’s MANA and The Sandbox’s SAND.

TokenUnlocks data reveals that on April 23, Axie Infinity will unlock 18.89 million tokens, valued at $155.27 million at the current rate, constituting 7% of the cryptocurrency’s total supply of 270 million.

Axie Infinity initiated a staggered 65-month token unlock plan in 2020. To date, 176.55 million tokens have been released, with the remaining 77.76 million scheduled for unlocking by the end of 2025.

Token unlocks are generally considered bearish catalysts since they enable holders to sell their coins, potentially increasing market supply. 

Early-stage projects often lock tokens to prevent significant holders, such as early investors or project team members, from selling their coins all at once, which could result in a price decline.

The Influence of Broader Market Forces on AXS Performance

Notably, token unlocks do not always lead to price drops. In the past, AXS has even experienced rallies leading up to unlocking events. Furthermore, the broader cryptocurrency market has witnessed selling pressure this week, with leading cryptocurrencies Bitcoin (BTC) and Ethereum (ETH) experiencing losses of 8% and 10%, respectively. In addition, most play-to-earn and gaming tokens have declined from 5% to 10%.

In light of these factors, AXS’ recent downturn is partially driven by broader market risk aversion, rather than solely by the upcoming token unlock event.

As AXS’ price continues to fall, the dollar value locked in futures associated with the token has also decreased by nearly 20% to $44 million this week, according to Coinglass data.

Navigating the Complex Interplay of Token Unlocks and Market Dynamics

While token unlocks, such as the impending Axie Infinity event, can contribute to bearish market sentiment, it is essential to consider the influence of broader market forces in shaping cryptocurrency trends. 

As evidenced by AXS’ recent performance, multiple factors can contribute to price fluctuations. Those make it crucial for investors and industry participants to stay informed and attentive to the complex interplay between token unlocks and market dynamics.