- Uniswap price is primed for a steep correction after breaking down from an ascending triangle pattern.
- Several technical and on-chain indicators add credence to the bearish outlook.
- If UNI slices through the $17.50 support, it could quickly drop towards $16.
Uniswap's 350% year-to-date rally could be coming to an end as its price has declined by more than 15% from an all-time high of $22.70. The DeFi token seems bound for further losses since investors continue to book profits.
Uniswap price reverses as bears take over
Uniswap price broke down from an ascending triangle pattern on February 6. The technical formation forecasts a 20% downswing that could push UNI's market value towards $16. This target is determined by measuring the height of the triangle's y-axis and adding it to the breakout point.
The pessimistic thesis is further validated by the Parabolic SAR and the SuperTrend indicator. While the former had a bearish flip over as prices broke down on February 6, the latter flashed a sell signal after Uniswap price fell below $18 on February 7 on the 4-hour chart.
UNI/USDT 4-hour chart
If the downward pressure continues, UNI might soon meet the triangle's target at $16.
On-chain metrics scream sell
Several on-chain metrics also paint a grim picture ahead for Uniswap price.
For instance, on-chain volume hit a peak of $6.6 billion on January 28, and since then, it has dropped to $952 million as of February 8. The 86% decline within such a short period suggests an exit of capital from investors reallocating or booking profits.
Moreover, the number of new daily addresses joining Uniswap's network plummeted by 40%, going from 10,959 addresses on January 31 to 6,475 on February 8.
This on-chain metric's significant decline signifies that market participants are not attracted to the DeFi token around the current price levels. Such lack of interest in Uniswap is also represented in its social volume, which recorded a 98% decline within the same period.
On-chain data analytics firm Santiment maintains that when these three indexes drop in unison, they form a reliable sign for future downward price action.
UNI On-Chain Volume, Daily Active Addresses, and Social Volume
Despite the number of sell signals that Uniswap price presents, it seems to be sitting on top of stable support, based on IntoTheBlock's In/Out of the Money Around Price (IOMAP) model.
Roughly 160 addresses previously purchased about 12.5 million UNI at $17.50. Therefore, only a 4-hour candlestick close below this demand wall will validate the bearish thesis and lead to further losses.
Uniswap IOMAP
On the flip side, Uniswap price faces stiff resistance at $20. Here, 5,000 addresses have previously purchased roughly 10 million UNI.
Given the unpredictability of the cryptocurrency market, it is reasonable to assume that a 4-hour candlestick close above $20 may have the momentum to invalidate the bearish scenario. If this were to happen, FOMO might kick in among investors pushing Uniswap price to $25.
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.
Recommended Content
Editors’ Picks
Polygon joins forces with WSPN to expand stablecoin adoption
WSPN, a stablecoin infrastructure company based in Singapore, has teamed up with Polygon Labs to make its stablecoin, WUSD, more useful in payment and decentralized finance.
Coinbase envisages listing of more meme coins amid regulatory optimism
Donald Trump's expected return to the White House creates excitement in the cryptocurrency sector, especially at Coinbase, the largest US-based crypto exchange. The platform is optimistic that the new administration will focus on regulatory clarity, which could lead to more token listings, including popular meme coins.
Cardano's ADA leaps to 2.5-year high of 90 cents as whale holdings exceed $12B
As Bitcoin (BTC) gets closer to the $100,000 mark for the first time — it crossed $99,000 earlier Friday — capital is rotating into alternative cryptocurrencies, creating a buzz in the broader crypto market.
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange
Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.
Bitcoin: Rally expected to continue as BTC nears $100K
Bitcoin (BTC) reached a new all-time high of $99,419, just inches away from the $100K milestone and has rallied over 9% so far this week. This bullish momentum was supported by the rising Bitcoin spot Exchange Traded Funds (ETF), which accounted for over $2.8 billion inflow until Thursday. BlackRock and Grayscale’s recent launch of the Bitcoin ETF options also fueled the rally this week.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.