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Week in GameFi: Axie Infinity, The Sandbox Rally as Sector Pulls BackThe GameFi market declined this week, though Axie Infinity and The Sandbox posted sharp gains.Here’s a quick rundown.🧵1/7 https://t.co/eh5enFCZ90 ...

$AXS surges to $2.65 for the first time since September 2025, now up 209.3% this month.Is GameFi and Axie Infinity making a comeback? https://t.co/Dhpwg5LnEz ...

Core Insights - Gaming tokens such as Axie Infinity and The Sandbox have experienced significant gains, with Axie Infinity rising 16.7% in the last 24 hours and 88.5% over the week, while The Sandbox increased by 15.3% weekly, indicating a potential shift in trader focus [1] Group 1: Market Performance - Axie Infinity's weekly gain of 88.5% and The Sandbox's 15.3% rally suggest a rotation in trader interest towards gaming tokens [1] - Other gaming tokens like Decentraland and Smooth Love Potion also saw weekly increases of 4.4% and 0.7% respectively, contributing to the overall positive sentiment in the sector [1] Group 2: Expert Opinions - Bertie Wrench, founder of Bad Bikers, describes the current gains in gaming tokens as a result of capital rotation and high-risk speculation, noting a shift in focus from meme coins [2] - Illia Otychenko from CEX.IO argues against the capital rotation thesis, stating that the pronounced movements in Axie and The Sandbox are due to their low baseline following a sustained downtrend [3] Group 3: Project-Specific Developments - Axie Infinity's recent restructuring of its tokenomics aims to revitalize its in-game economy and address issues like bot farming, which may have positively influenced sentiment in the GameFi sector [4] - Experts agree that a sustained revival in the gaming sector would require a fundamental increase in demand for tokens within games, indicating that current movements are more localized rather than indicative of a structural shift [4] Group 4: Sector Challenges - The GameFi sector remains under pressure, with a reported 75% decline in 2025 and a 55% reduction in funding last year, highlighting ongoing challenges [5] - Research indicates that only a small number of games consistently exceed 100,000 weekly active wallets, reflecting the difficulties faced by the broader gaming industry [5]

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Market Overview - The GameFi market experienced a cooling period after a strong start to January, with total market capitalization falling about 2% week-over-week to approximately $9.35 billion, despite having more than doubled over the previous 30 days [1]. Axie Infinity Developments - Axie Infinity's native token, AXS, saw significant volatility, with its market cap reaching about $230 million on January 14, a 50% increase from two days prior, before retracing over 14% to a market cap of approximately $208 million by January 16 [3][4]. - A major restructuring of Axie Infinity's tokenomics was announced during a Discord panel on January 13, where co-founders revealed plans to transition AXS rewards to a new app token, bAXS, as part of a broader overhaul set for 2026 [4][5]. - The new bAXS token will be earned through gameplay and can be spent, staked, or sold, but will initially be tied to user accounts [5]. Other GameFi Tokens - Smaller-cap gaming tokens, such as World of Dypians (WOD), struggled to maintain momentum, with WOD's market cap dropping nearly 40% in the week following a significant increase from around $9 million to over $20 million [7]. - World of Dypians announced the integration of Grok, an in-game AI assistant designed to enhance player experience without disrupting gameplay [8]. Pixiland's Shift - Pixiland: Age of Heroes announced on January 15 that it would pause all Web3 features and transition to an exclusively Web2 model [9].

Crypto Gaming Overview - Crypto gaming currently possesses the most product-market fit (PMF) within the crypto space [1] - The core of crypto gaming lies in player competition, particularly trading against each other [1] GameFi Performance Concerns - GameFi has been identified as a challenging vertical within the crypto industry [1] - $GUNZ's Fully Diluted Valuation (FDV) is down -89.7% from its All-Time High (ATH) [1] - $GUNZ raised over $82 million (plus undisclosed rounds) and is currently trading at a $118 million FDV [1] - $SHARP also raised significant capital [1]

Market Trends - GameFi trading volume experienced a significant surge, increasing by over 100% [1] - Ronin network activity decreased due to the declining popularity of its leading game [1] Company Performance - MetaArena outperformed its competitors with a 25% weekly increase [1] Partnerships - Anome Protocol and SentismAI have formed a partnership [1] Risk Alert - Web3 gaming malware poses a potential threat to the GameFi sector; caution is advised [1]

Crypto Sector Performance in 2025 - DeFAI is projected to be the worst-performing crypto sector with a decline of 97% [1] - Modular sector is expected to decrease by 92% [1] - DeSci sector is forecasted to drop by 91% [1] Significant Declines in Other Sectors - AI sector is anticipated to experience a significant drop of 87% [1] - GameFi sector is predicted to decline by 85% [1] - Low Float Tokens are expected to decrease by 84% [1] - LRTs are projected to fall by 83% [1] - Data sector is forecasted to drop by 81% [1] - L2s are anticipated to decline by 81% [1]

Market Overview - The U.S. Senate confirmed Michael Selig as the new CFTC head, which may bring regulatory clarity to the crypto industry [1] - Bitcoin's price fluctuated, reclaiming $88.2K after dropping to $85K, but ended the week down 4% [1] - Fidelity warns that Bitcoin could potentially drop to $65,000 [1] GameFi Sector Performance - The GameFi sector experienced a downturn, with most leading tokens in the red [2] - Victoria (VR) managed a 16% weekly gain, indicating capital rotation towards altcoins [2] - The overall market cap of the Web3 gaming sector decreased by 15% to $7.7 billion, while trading volume surged by 116% to $2.8 billion [6] Security Concerns - A fake Telegram game led to a significant loss for a Singapore entrepreneur, highlighting vulnerabilities in browser wallets and the importance of Web3 security practices [5] Industry Sentiment - The Fear and Greed Index fell from 29 to 21, indicating a shift into Fear territory [7] - The Web3 gaming sector dropped from second to twelfth place on DeFiLlama's narrative tracker, reflecting thin liquidity and a shift in market focus [9] Specific Game Performance - Ronin network activity declined by 70% in 2025, revealing its reliance on popular Web3 games for momentum [10] - MetaArena outperformed its peers with a 25% weekly increase [4]