Uniswap price could plummet as UNI held on exchanges exceeds $420 million

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.

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.

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.

Share: Cryptos feed

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.