The price of Axie Infinity has dropped, but the bigger question is why are whales buying now. Since its breakout on January 21, the price of AXS has jumped by about 41%, reaching a level near $3.00. The rise was fast and largely uninterrupted. Now, warning signs have started to appear, as the price has dropped by more than 17% day after day, even as large stakeholders quietly added to their exposure.

This creates a clear conflict. Whales are returning, but several signals in the charts indicate that the risk of a near-term pullback is rising.

The negative harami index indicated buyer exhaustion after the rise.

The first warning of an early collapse came within 24 hours from the daily AXS candle structure. A bearish harami pattern formed near recent peaks. The bearish harami occurs when a small red candle forms within the body of a previous strong green candle. This indicates that buyers are losing momentum and sellers are starting to resist.

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This pattern is important because Axie Infinity has shown this behavior before. On January 18, a similar bearish harami appeared after a strong advance. In the following days, AXS corrected the valuation by approximately 26%. This move was driven by a retreat of buyers while sellers used the higher prices to exit.

This means that a larger collapse may be coming, especially as AXS has dropped by 17% in the past twenty-four hours. After a 41% rise, this indicates that the strength of the rally is no longer expanding. At least, not for a short while.

Whales are finally buying again — is this misplaced optimism?

On-chain data shows that something important has changed. Axie Infinity whales were reducing exposure during the previous phases of the rally. This selling pressure was evident across sentiment data and coincided with a sustained price advance. This confirms that AXS whales may be using Axie Infinity's monthly price strength of 220% to offload their losing positions.

This behavior has now changed.

Since January 22, whale wallets have increased from around 243.78 million AXS to about 243.94 million AXS. This equates to adding approximately 160,000 tokens. At the current price, the purchase was valued at around $430,000.

This indicates that the whales are no longer using the rally to exit. Instead, they seem to be gearing up for strength and conviction.

This currently adds a layer of support, but it does not eliminate the short-term risks posed by the bearish harami candle pattern that has already begun to correct.

Exchange flow data confirms this mixed picture. On January 15, Axie Infinity saw large exchange outflows of around 4.07 million tokens, a clear indicator of selling pressure. By January 18, flows flipped sharply negative, with about 465,000 tokens leaving exchanges, indicating strong buying demand.

Until January 24, outflows to exchanges slowed to around 112,000 tokens. This means that buyers still dominate, but demand is weaker than before. Profit-taking began, even as whales increased selectively. Are the whales making the right decision?

The divergence of mid-cap funds and AXS price levels were the two critical factors.

Momentum indicators have reinforced the warning. The money flow index, which tracks buying and selling pressure using price and volume, has trended downwards even as the price rose between January 17 and 23, at $2.71.

It showed that the declines were not being bought with the same strength as before the rise. The price of AXS began to drop, and the immediate lower support beneath pushed the level down.

From a price perspective, key levels have quickly become clear. On the positive side, we need Axie Infinity to reclaim and hold the price above $3.00 (a key level that previously rejected the price), then surpass $3.11. A breakout above $3.11 could pave the way towards $4.02.

But that didn't happen.

On the bearish side, $2.54 has emerged as crucial support. This level aligns with the 0.618 Fibonacci retracement and has acted as a strong reaction area in the past. AXS lost $2.54, and the correction began.

The pullback may now deepen towards $2.20 and even $1.98, trapping the whales deeper in the process.

Whales are buying, but the momentum is fading. Buyers are still in control, but they are no longer aggressive.

If Axie Infinity reclaims the rise above $2.54 and rebuilds momentum, the rally could continue. If not, the market may need a deeper correction before the next upward move.