Crystals must be destroyed!

The axe that you find in that level. You'll see a cut scene where it is poured into a mold, then cooled, then it drops.

Just use your power attack a couple of times and it should do the trick.
 
You must forge it in the area below. Just past the Shrine. If you enter the double doors and make your way all the way through the areas that follow you will locate the supreme Axe that will gain you ultimate victory over the crystal menace. (and do some hearty monster choppin' in the process!)
 
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