Should UNI traders expect a sell-off or a price reversal next?

• UNI’s exchange reserves surged recently, hinting at a hike in selling pressure for the token
• Altcoin’s technical indicators and Unichain’s $1 billion volume milestone could aid a reversal

Uniswap’s native token, UNI, has seen a surge in exchange reserves over the last 24, hours according to CryptoQuant’s report. What this means is that more market participants are moving their UNI tokens to exchanges, possibly to sell.

In the past, this kind of behavior has led to price drops as more supply meets market demand. If this keeps up, UNI could see downward pressure on the charts. 

On the contrary, however, technical and ecosystem developments seemed to hint at a potential reversal in the near term.

Source: CryptoQuant

A glimpse of hope for UNI bulls?

Despite sell-side pressure, UNI’s $6.625 price level has been probing a strong demand zone. The zone has historically acted as a solid support, generally compelling several reversals.

To add to the optimism, the altcoin’s RSI (Relative Strength Index) was in the oversold territory at press time. The indicator suggested that UNI could be under-priced and therefore, a bounce becomes probable if the buying appetite intensifies.

If bulls save the day, a short-term rally could be on cards for UNI. 

Source: TradingView

On-chain metrics point to a potential rally

Interestingly, UNI on-chain activity also lent some positive insights. Unichain recently crossed $1 billion in volume on the Uniswap Protocol, according to a recent Uniswap Labs tweet.

The milestone only serves to highlight Uniswap’s sustained popularity in the DeFi space. If this growth is mirrored in higher UNI demand, it could neutralize the selling pressure.

The fight between mounting selling pressure and technical reversal signals makes the next move by UNI uncertain. Under dominance of increased selling pressure, the altcoin could go lower to test lower support levels.

However, if the buyers capitalize on the current oversold condition and positive on chain developments , a relief rally can emerge.