Axie Infinity erases September losses – But AXS price faces THIS threat

While the broader crypto market remained under pressure, gaming tokens stayed relatively insulated and posted strong gains.The sector recorded a monthly weighted average increase of roughly 40%, with AXS among the top performers.Axie Infinity’s [AXS] recent rally erased losses accumulated since the 12th of September 2025, pushing many holders back to break-even. However, momentum indicators suggested the advance may be nearing exhaustion, raising pullback risk.Investor positioning raises cautionInvestor positioning in AXS grew increasingly aggressive during the rally. That shift raised questions about the uptrend’s durability.At press time, the Relative Strength Index (RSI) moved back above 70, placing AXS in overbought territory. Such conditions historically preceded short-term price tops rather than sustained breakouts.The TradingView chart showed RSI remained elevated as price accelerated. That divergence increased the probability of near-term mean reversion.Source: TradingViewThat said, downside risk appeared contained for now. The Accumulation/Distribution indicator dipped modestly but stayed firmly positive.This suggested selling pressure increased, yet broader market structure remained supportive. Any pullback would likely remain corrective unless accumulation weakened further.Spot investors pull backSpot market activity offered one of the clearest signals of shifting sentiment, with capital beginning to exit the market.Exchange Netflows showed Spot traders sold roughly $91,000 worth of AXS over the past 24 hours.That marked a clear shift from the steady buying observed during the recent advance. Spot participants often provide structural support, making their retreat notable.Source: CoinGlassOn top of that, trading activity slowed sharply. CoinGlass data showed volume fell 21% to about $2 billion, a decline exceeding $400 million.When price advances on falling volume, it often signals weakening momentum. Historically, such conditions have preceded either consolidation or corrective price moves.Derivatives market signals divergenceDerivatives data presented a mixed picture. The Taker Buy/Sell Ratio showed that bullish sentiment still dominated in the perpetual Futures market, with taker buy orders outweighing sell orders.However, funding data told a different story. The OI-Weighted Funding Rate turned decisively negative, signaling that short positions outweighed longs.Source: CoinGlassCoinGlass data showed the metric printed -0.1286% at press time. That meant bearish traders paid funding to maintain exposure.If negative funding persisted alongside softening spot demand, downside pressure could build. That alignment would increase the risk of a deeper corrective phase for AXS.Final ThoughtsAxie Infinity (AXS) erased post-September losses as gaming tokens outperformed, lifting the price back toward key resistance.Overbought RSI, weakening spot demand, and negative OI-Weighted Funding Rate suggest momentum may fade near-term.