Here's Why Axie Infinity Is Rocketing Higher Today

What happened

One of the biggest movers in the cryptocurrency world today happens to be none other than Axie Infinity (AXS 1.76%). In the span of 30 minutes in early morning trading, Axie Infinity's AXS token jumped as much as 18%, before paring some of those gains. As of 12:30 p.m. ET, Axie Infinity is still up materially, surging 9.8% over the past 24 hours. 

This move appears to be a direct result of data published on the number of unique wallets on the play-to-earn gaming platform. Reports that unique active wallets have surged over the past day (by an impressive 77%) have led some investors to ease back into a position in this flailing crypto platform.

So what

Despite this impressive surge in active wallets, Axie Infinity's monthly unique active wallet count is still down more than 10% over the past month. Users appear to be losing interest in the play-to-earn crypto platform, in which users purchase and battle their Axies (creatures), receiving rewards in the form of the Smooth Love Potion (SLP) token. 

There are a number of reasons for this. However, last year's decline in crypto valuations has led to declining rewards, which have forced play-to-earn gamers who may have been able to earn some reasonable money playing this game to seek alternatives. This sort of so-called "death spiral" is what has led Axie Infinity to sink from more than $160 per token at the height of the 2021 bull market to less than $5 per token today (after its impressive move higher today). 

Now what

Today's surge in Axie Infinity and a number of other smaller and more speculative crypto projects appears to align with the directional move of the broader market. Like many altcoins, Axie Infinity's price action often takes its cues from the performance of the overall crypto sector, which is doing well today. This reality, combined with some strong wallet data, appears to have led to a momentum-driven surge higher.

I'm not convinced this move can be sustained, and would suggest that a trend higher in real users will need to be seen in order for Axie Infinity to gain real momentum from here. For now, this is a token I think crypto investors should keep an eye on. Indeed, a 10% intraday move is nothing to scoff at. Let's just see if Axie Infinity can keep the momentum going from here.