AXL, the programmable blockchain interoperability platform, is facing potential losses as on-chain metrics point to further downward pressure on the crypto asset. The recent price slump has seen AXL fall for three consecutive days to $0.6152, bringing its market cap down to $552 million. Since December 16, the altcoin has experienced a 40% price drop, with monthly losses at 27.8%.
Several on-chain metrics indicate that AXL could continue to face challenges in the coming days. The DeFi ecosystem associated with Axelar has seen a significant decrease in total value locked, dropping from $367 million to $254 million since December 18. This decline suggests reduced user activity and declining investor confidence in the project.
Furthermore, AXL traders have been moving their holdings to exchanges at an increasing rate over the past week. This trend could lead to a price correction in the short term as investors may be looking to cash out due to waning confidence in the project or to reallocate funds to other projects.
The sentiment surrounding AXL has turned bearish, with weighted sentiment currently at -0.818, indicating increased pessimism among traders. Demand among derivative traders has also decreased, with open interest in AXL futures dropping from $19.9 million to $10.44 million.
The recent decline in AXL’s price can also be attributed to the prevailing risk-off sentiment in the market, driven by the Federal Reserve’s hawkish stance on interest rate cuts and rising U.S. bond yields. Bitcoin’s drop below $100,000 has further exacerbated losses in the altcoin market, where volatility and downside risk are typically more pronounced.
On the technical side, indicators such as the Moving Average Convergence Divergence (MACD) and Chaikin Money Flow Index suggest bearish momentum in the short term. However, there is potential for relief as whales have shown increased interest in AXL at current price levels, which could be seen as a bullish signal for retail investors.
Overall, the future of AXL remains uncertain as it navigates through a challenging market environment. The altcoin’s performance will likely be influenced by external factors such as Bitcoin’s price movements and market sentiment leading up to significant events like President-elect Donald Trump’s inauguration in late January. Investors and traders will need to closely monitor developments in the coming days to assess the potential for recovery or further losses in AXL’s price.