- Uniswap supply on exchanges is inching closer to a six-month high, increasing the potential selling pressure on UNI.
- Uniswap announced the official completion of over $1.7 billion in swaps on January 3.
- UNI price suffered nearly 20% decline in the past week and it is likely to fall further, according to on-chain metrics.
Uniswap (UNI) has had a tough start of the year despite the open source project’s announcement that it successfully facilitated $1.7 billion in swaps on January 3. Despite this statistic, UNI price has fallen by around 20% in a week, along with a decline in active addresses and volume since the beginning of the year.
On-chain metrics support a bearish thesis for UNI price. The decline in active addresses and volumes comes together with rising supply on exchanges, potentially increasing the selling pressure on the DeFi token. The anticipation of a Spot Bitcoin ETF approval has failed to catalyze a recovery in the DeFi asset, unlike other altcoins in the ecosystem.
Also read: Bitcoin Spot ETF wars intensify as issuers work on competitive fees, BTC price eyes gains
Uniswap on-chain metrics signal correction
Uniswap supply on crypto exchanges climbed to 6.92% of the total supply, close to a six-month high on Tuesday. UNI token inflows to exchanges increased in January, with more than $420 million worth of Uniswap tokens sitting on exchange platforms.
With this consistent inflow, the DeFi asset is likely to face mounting selling pressure. Typically, an increase in selling pressure drives the asset’s price lower. This could explain the 20% price drop in UNI over the past week.
 [11.51.32, 09 Jan, 2024]-638403846458519938.png)
UNI supply on exchanges and price. Source: Santiment
Two other on-chain metrics that support the price decline thesis are active addresses and volume. For Uniswap, both of them are trending lower since the beginning of January, according to Santiment data.
These metrics represent the relevance of an asset and reflect demand among market participants. When combined with the rising exchange supply, this supports a bearish thesis for UNI.
 [12.06.10, 09 Jan, 2024]-638403846767468455.png)
UNI active addresses and volume. Source: Santiment
Despite the completion of $1.7 billion in swaps on January 3, Uniswap price failed to recover. UNI holders suffered nearly 20% weekly and 10.68% monthly losses. UNI price is $6.117 on Binance at the time of writing and the asset is down 2% on the day.
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