Amid a broader cryptocurrency market sell-off, Axie Infinity's native token, AXS, has staged a dramatic and sustained rally, climbing over 200% since the start of January 2026. The token recently broke above the $2.4 level, erasing losses from a significant sell-off in October of the previous year. This surge stands in stark contrast to the general market weakness, with Bitcoin trading near $89,000 (down over 3%) and Ethereum around $2,970 (down more than 6%).
The rally was initially triggered by a major announcement from the project's founders. They revealed a plan to transition AXS rewards within the game into an app-token version called bAXS. This new token can be used within the Axie Core application and staked for additional benefits, a move seen as revitalizing the token's utility within its ecosystem.
South Korean traders have been a primary driver of the momentum, providing substantial liquidity. Data from CoinGecko shows that on a day with over $1 billion in AXS trading volume, the South Korean exchange Upbit alone accounted for more than $320 million, representing over 32% of the total. Prices on Upbit consistently traded at a premium compared to global exchanges like Binance, indicating strong localized buying pressure and optimism for further gains.
Co-founder Jihoz.ron highlighted the project's unique emotional appeal, stating, "Nostalgia is the most powerful emotion in the universe. There's no other IP in crypto that can make people feel both nostalgic for the past and excited for the future. That's the zone of genius where Axie lives." This sentiment aligns with a reported renewed investor interest in GameFi projects, with capital flowing back into once-forgotten tokens.
However, multiple on-chain and fundamental data points raise significant warning flags. Analysis from CryptoQuant indicates that AXS balances on exchanges have increased alongside the price, suggesting potential selling pressure as more tokens become available for trade. Furthermore, the seven-day average transaction count for deposits has hit a three-year high, with several large wallets moving AXS to Binance.
A critical concern is the lack of user growth on Axie Infinity's core Ronin network. Data from Dune Analytics shows weekly new active addresses remain below 10,000, a stark decline from over 500,000 in 2024, indicating saturation in the play-to-earn model. Additionally, speculative activity is high, with open interest in AXS futures contracts exceeding $130 million, the highest in three years, increasing the risk of cascading liquidations during volatility.
Analysts warn that for the rally to be sustainable, AXS must break through the key resistance level of $3.86. Failure to do so could lead to renewed volatility and a potential decline in 2026, as the token's price movement currently appears decoupled from fundamental user growth.
