Grayscale goes long on Uniswap, while UNI price targets $11

Uniswap price has fallen 30% since the 200-day simple moving average (SMA) test on July 7. The cryptocurrency now sits just above the lower trend line of a symmetrical triangle going back to the May 23 low. The near-term outlook for the DeFi token is mixed as UNI has decoupled from the bullish thrust underpinning the DeFi space off the June 22 low and taken on the form of the bearish cryptocurrency market. Market speculators should anticipate a test of at least the May 23 and June 22 lows.

Grayscale and Coindesk Indexes combine to fill a demand for DeFi assets

Grayscale Investment, the world’s largest digital currency asset manager, and CoinDesk Indexes, a subsidiary of CoinDesk Inc., launched a new, diversified Fund product, and the CoinDesk DeFi Index.

The new Fund will directly expose investors to industry-leading DeFi protocols through a market-capitalization weighted portfolio designed to track the new CoinDesk DeFi Index. The new fund marks Grayscale’s fifteenth investment product and its second diversified fund offering.

According to Grayscale Investment CEO Michael Sonnenshien, the new launch continues Grayscale’s commitment to creating opportunities for investors to capitalize on the emerging opportunities in the digital asset system.

Grayscale continues to focus on creating opportunities for investors to access new, exciting parts of the digital asset ecosystem.

The Fund is now open for daily subscription by eligible individual and institutional accredited investors.

Meanwhile, the CoinDesk DeFi Index aims to provide a broad-based, benchmark representation of DeFi protocols, and the methodology includes liquid DeFi assets on a market cap-weighted basis. As of July 1, some of the Index’s largest assets include Uniswap (UNI/USD) at a 49.95% weighting, Aave (AAVE/USD) at 10.25%, Compound (COMP/USD) at 8.38% and Curve (CRV/USD) at 7.44%.

For CoinDesk Indexes, the “collaboration offers investors the data and tools they need to gain exposure to decentralized finance into their portfolios.”

Uniswap price shows that bulls are not active at current levels 

Uniswap price has scripted a symmetrical triangle pattern over several weeks, beginning at the May 23 low. The coiling formation has developed half the time above the 200-day SMA and half below the strategically important moving average. At times UNI has shaken the bearish tendencies of the cryptocurrency market to participate in price strength generated by renewed interest in the DeFi space.

The measured move of the symmetrical triangle is over 55%, marking a tremendous move once the pattern resolves. On the downside, the Uniswap price target is $6.39, shattering the 78.6% Fibonacci retracement of the UNI rally originating at the end of November 2020 at $11.01 and the 2020 high printed in September 2020 at $8.66.

The more realistic decline if the symmetrical triangle resolves to the downside is the 78.6% retracement at $11.01, representing a loss of 25% from the pattern’s lower trend line.  

A daily close below the lower trend line at $14.70 will confirm the breakdown and push Uniswap price towards the June 22 low of $13.90 and then the May 23 low of $13.01. If the bearish tone in the cryptocurrency market continues, UNI will be at risk of testing the 78.6% retracement at $11.01.

UNI/USD daily chart

A release to the upside from the symmetrical triangle is a tougher challenge for Uniswap price, with the declining 50-day SMA close to the triangle’s upper trend line at $21.50. A daily close above $21.50 would confirm a breakout, but UNI would be met with the sturdy resistance of the 200-day SMA at $24.30. Once above the long-term moving average, Uniswap price can pursue the price target of $34.03.

For a couple of weeks, DeFi cryptocurrencies staged a sizable rally off the June 22 low, lifting Uniswap price to the 200-day SMA at $23.45 and a gain of approximately 65%. However, the bearish rhythm of the cryptocurrency complex has punished the space and put UNI near the lower trend line of a symmetrical triangle, surrendering it a potential 25% decline.