After a great comeback victory against Wang Zhengxing on Wednesday, the tables were turned on Axelsen on Thursday against Frenchman Alex Lanier.
Axelsen was ahead 22-20, 15-9 before he lost his stride and confidence, and a bewildered Axelsen lost 15-21, 13-21 in the last two sets against the world number seven.
With the win, Lanier now potentially faces top-seeded Anders Antonsen in the quarterfinals of the Super 750 tournament if the Danes defeats Ng Ka Long from Hong Kong.
Thursday started badly for Axelsen, who made far too many mistakes and allowed Lanier to pick up many points after short duels.
3-2 turned into 4-9, before Axelsen recovered his game and played with greater patience allowing Lanier to work hard for each point.
There were glimpses of former strength in the latter part of the first set, and after warding off a set point at 19-20, Axelsen showed his class to win the set.
Helped along the way by coach Peter Gade, Axelsen found a tactical advantage, and physically he also looked excellent in the first part of the second set, when Lanier was on his heels.
From 2-2 Axelsen steered comfortbaly towards a very uplifting victory, before it very suddenly went the other way.
Ahead 15-9, the match turned completely on its head, and things went awry for Axelsen, who lost 12 successive points and went to the break dejected.
The last remnant of self-confidence and belief in victory disappeared around 8-8 in the third set, when Axelsen asked Gade for new tactics and then vented his frustrations after another big mistake.
