Axie Infinity price wavers as investors wait out the $175 million token unlock

Axie Infinity price (AXS) has wobbled ahead of the upcoming token unlock event scheduled for April 23, causing the token to drop by a significant margin while it gives traders a chance to buy the dip. Standing among the top players in the GameFi and non-fungible token (NFT) spaces, Axie Infinity allows platform users to play games and be rewarded for their achievements. Notably, player rewards come in the form of the Smooth Love Potion (SLP) token and sometimes even AXS tokens.

Axie Infinity token unlock event

The Axie Infinity token unlock event scheduled for April 23 is among the top news in the crypto scene this week and next week, with data showing that the network’s developers will unleash more than 18 million AXS tokens. Based on current rates, this translates to at least $175 million. This represents about 7% of its total market capitalization, based on CoinMarketCap data.

Notably, this is not the first time Axie Infinity is unlocking tokens, as the network runs on a schedule that shows all the tokens will be unlocked by 2025. Noteworthy, the total locked supply of AXS tokens is around 29%, according to the latest data.  

More often than not, token unlocks have a bearish impact on cryptocurrency assets because they cause dilution in the market. To put this in perspective, CoinMarketCap data shows that the circulating supply of Axie Infinity tokens is around 116 million, with a market capitalization of around $957.6 million.

By unleashing new tokens to the market, Axie Infinity will be diluting the quantity of AXS held by existing holders. This is concerning and explains why the likes of dYdX put off its token unlock worth around $150 million earlier in the year.

Nevertheless, some tokens tend to soar in price following dilutive events, although not in every instance. For example, Ethereum price (ETH), currently at $1,944 after the network completed its Shanghai/Capella (Shapella) upgrade on April 12, marked an uptick of about 10% in a month.

The event opened the gates for anyone to withdraw their staked Ethereum (stETH) tokens.

Axie Infinity price eyes 25% gains ahead of the token unlock

Axie Infinity price of $8.21 at the time of writing appears to be coiling up for a breakout. Investors should probably buy AXS at current rates in to avoid missing the train once the rally begins. If buyer momentum increases, the gaming token could ascend toward the 50- and 100-day Exponential Moving Averages (EMA) at $8.78 and $9.01 respectively.

Breaking above these levels could clear the path for more gains, setting Axie Infinity price up for a 25% rally to $10.10. In highly bullish cases, AXS could tag the 200-day EMA at $11.16 or in extreme cases, the $11.73 resistance level.

The uptick for Axie Infinity price would be possible especially if traders play into the 'buy the rumor sell the news’ narrative.

AXS/USDT 1-day chart

On the flipside, if sellers overpower the bulls, Axie Infinity price could head lower, potentially tagging the $7.78 support level. A break below this base could invalidate the bullish thesis. In highly bearish cases, AXS could extend a leg down to the psychological $6.85, or worse, tag the $5.98 support floor.