AXL in trouble? on-chain metrics point to potential losses

Axelar (AXL) has been facing significant downward pressure recently, with its price showing little signs of recovery. The programmable blockchain interoperability platform has dropped for three consecutive days, reaching a low of $0.6152, and its market capitalization has shrunk to $552 million. Since mid-December, AXL has experienced a 40% decline, and its monthly losses stand at 27.8%.

On-chain metrics suggest that further downside could be in store for the crypto asset. A key concern is the sharp decline in Axelar’s Total Value Locked (TVL) in decentralized finance (DeFi) platforms. Since December 18, the project’s TVL has dropped from $367 million to just $254 million, according to DeFiLlama data. This indicates a slowdown in user activity and signals waning investor confidence.

Additionally, more AXL holders have been transferring their tokens to exchanges in recent days. Data from CoinGlass shows that net flows to exchanges have increased, which could be a precursor to a price correction. This behavior may be driven by diminished trust in Axelar or by investors seeking to diversify into other projects.

Social sentiment around AXL has also taken a bearish turn, with the weighted sentiment currently sitting at -0.818, reflecting growing pessimism among traders. Meanwhile, interest in AXL futures has also dropped, with open interest falling from $19.9 million on December 4 to just $10.44 million at the time of writing.

The broader market sentiment, particularly concerns about the Federal Reserve’s hawkish stance on interest rate cuts and rising U.S. bond yields, has contributed to the ongoing bearish trend. Bitcoin’s recent struggles below $100,000 have further exacerbated the downturn, leading to increased volatility and a more pronounced risk-off attitude in the altcoin market.

From a technical perspective, AXL’s price chart shows signs of a bearish reversal. The Moving Average Convergence Divergence (MACD) indicator has shown the MACD line crossing below the signal line, suggesting a short-term price decline. This bearish signal is also reinforced by the Supertrend indicator, which currently sits above the price, as well as a Chaikin Money Flow (CMF) index reading of -0.11, pointing to mild selling pressure.

However, AXL may see some support from large investors. Whale activity has increased recently, with significant inflows of tokens into whale wallets between January 6 and January 8, rising from 128.48k tokens to 2.59 million. This growing interest from whales could provide some price stability, as such moves often signal potential bullish momentum, which could attract retail investors as well.