What happened

Crypto play-to-earn game Axie Infinity (AXS 4.18%) has seen its tokens go up about 14% over the past 24 hours, as of 9:30 a.m. ET on Monday morning. Moreover, Axie Infinity tokens are up about 37% over just the past week, according to data from CoinMarketCap. And the timing of these big gains couldn't be more unusual.

Axie Infinity is scheduled to have a token unlock today. And you'd expect this to have the opposite effect on the price of Axie Infinity tokens.

So what

According to its white paper -- the document that explains how it all works -- new Axie Infinity tokens are set to be unlocked at a regular schedule. Today's unlock event will add about 5 million tokens to the circulating supply, taking Axie Infinity's supply from 64.34% in circulation to 66.15% in circulation.

Supply-and-demand dynamics play a very big role in the crypto space, in my opinion. With a higher supply of Axie Infinity tokens in circulation, I would have expected the price to drop, at least modestly.

Last week, Axie Infinity's game started a two-week event called the Epic Era, during which players can earn from a prize pool of 33,600 tokens. So perhaps investors are hoping the Epic Era can draw in gamers.

Now what

Drawing in gamers is very important for Axie Infinity. According to ActivePlayer.io Game Statistics Authority, Axie Infinity only has about 432,000 active monthly users over the past 30 days. That's its lowest since September 2020, which suggests the game is in decline -- not great for the long-term forecast of Axie Infinity token values.

Finally, today's unlock for Axie Infinity is small. However, its next unlock, which will be bigger, is scheduled for April 23. The circulating supply of Axie Infinity tokens is set to jump from 66.15% to 73.28%. Therefore, this play-to-earn game is going to need to attract a lot more demand in the next 90 days if it's going to overcome this sharp increase in supply.