AXS Climbs After September Losses, But Danger Lurks Ahead

• AXS recovery: Rally erased September losses, returning many holders to break-even levels.

• Momentum warning: RSI over 70 and declining volume signal potential short-term pullback.

• Market risks: Negative funding and spot sell-offs increase the chance of corrective moves.

Axie Infinity has made a strong comeback, erasing losses from mid-September 2025. Gaming tokens showed resilience even as the broader crypto market struggled, and AXS emerged among the top performers. The rally has returned many holders to break-even levels, but momentum shows signs of fatigue. Traders and investors are watching closely, as aggressive positioning and overbought conditions suggest the upside might not last. Short-term corrections could be near.

$AXS simply does not want to stop😎#AxieInfinity pushed higher into the target area as hoped for.

I think there is a high likelihood that Wave-(iv)🔵 starts soon or has already started.
If it has started, the target area is $2,35 to $1,85.

The correction should take at least… https://t.co/3lqW1D6tyK pic.twitter.com/jEvmq23EAB

— V (@finsends) January 22, 2026

Rally Strength Faces Early Warning Signs

Gaming tokens overall recorded a monthly weighted average gain of around 40%, with Axie Infinity leading the charge. AXS climbed steadily, attracting new spot buyers and renewed investor interest. However, momentum indicators warn caution. The Relative Strength Index (RSI) climbed above 70, signaling overbought conditions. Historically, such levels often appear near short-term tops rather than sustained breakouts.

TradingView charts highlight a divergence between price and RSI. While price surged, RSI remained elevated, increasing the likelihood of a pullback. Accumulation/Distribution metrics suggest selling pressure rose slightly, but the trend remains generally positive. This indicates that any decline may remain corrective unless accumulation weakens further. Investors should monitor these indicators carefully, as they can signal when the market may take a breather.

Spot market behavior supports this cautious view. In 24 hours, exchange netflows showed spot traders sold roughly $91,000 worth of AXS. This contrasts with steady buying observed earlier in the rally. Spot participants usually provide structural support for price levels, so their withdrawal is noteworthy. Additionally, trading volume fell 21% to around $2 billion, a drop of more than $400 million. Price advances on declining volume often precede consolidation or corrective moves, making the situation more delicate.

Derivatives Data Signals Mixed Sentiment

Derivative markets offer a slightly different perspective. The Taker Buy/Sell Ratio indicates bullish dominance, with taker buy orders exceeding sell orders in perpetual futures. Traders still place confidence in AXS in these markets. However, the OI-Weighted Funding Rate has turned negative at -0.1286%, showing that shorts outweigh longs. Bearish traders are paying funding to maintain exposure, signaling growing downside pressure.

If negative funding persists alongside softening spot demand, deeper corrections could follow. Market structure currently remains supportive, but risk levels are rising. Traders and investors should remain vigilant, as shifts in either spot or derivatives markets can amplify price swings. A cautious approach may help preserve gains if corrective activity emerges.

Overall, AXS has recovered impressively since September losses, but warning signs exist. Overbought conditions, declining volume, and changes in investor positioning suggest short-term risks. Derivative data reinforces mixed sentiment, highlighting potential challenges ahead. Careful monitoring and measured trading may help holders navigate upcoming market fluctuations.