Uniswap TVL Drops Over 10% As Prices Replicate a Similar Drop

Uniswap’s total value locked (TVL) has plummeted by over 10% in the past 30 days. This reflects a broader decline in decentralized finance (DeFi) activity on Polygon.

Uniswap’s TVL now sits at $108 million, down 11.5% for the month, according to DefiLlama.

Furthermore, this drop indicated a downward trend across other DeFi protocols on the Polygon, such as Aave and Balancer, whose TVL also dipped during the same period.

Uniswap, however, remains one of the significant DeFi platforms despite its pullback. The total value of assets locked on Polygon is around $844 million.

UNI Price Plunges in Tandem with TVL Decline

As per research, Uniswap’s TVL dropped from a peak of $4.91 billion on November 8 to just $3 billion by December 3.

This drop has been matched alongside Uniswap’s native token, UNI’s price, which is decreasing in value.

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In the last 30 days, UNI has been down just over 9%, from almost $16 to its current trading price in the range of $12.

CoinMarketCap and TradingView charts also indicate that the market sentiment around the token has been generally bearish.

A cascade of prices has marked UNI’s recent price action. However, at the end of January, we saw a bit of a rebound in the $11.50 – $12 range.

There are many reasons for UNI’s price decline. First, overall, DeFi engagement has dropped. This is mainly due to online trader apathy and macroeconomic uncertainty.

Consequently, trading volume has been cut. Competition between DeFi products, namely newer Layer 2 solutions and other decentralized exchanges, has also affected Uniswap’s TVL and token price.

Market Outlook and UNI Price Prediction

From our technical indicators perspective, UNI’s near-term prospects remain in line with the current short-term volatility trend.

The shaded region in the chart below is a descending channel where the price was moving in lower highs and lower lows.

The fact that the price can’t break that trend and starts moving downward is precisely the selling pressure we are used to seeing.

Yet the latest price action appears to have disappeared from this descending channel.

The momentum of UNI/USD has changed as the pair surged above the upper band of the trend.

More substantial buyer participation is also evident through a notable increase in the breakout supported by bullish volume.

The asset can take on higher resistance levels if this momentum can stick.

$11.96 here is testing a previous consolidation level, which could provide some minor resistance before pressing on higher.

A push above this level could be a successful signal towards a retest of the $12.50 – $13.00 range, which was rejected in the past.

If, on the other hand, UNI rejects this level and does not make higher lows, support could be retested in the $11.50 – $11.30 zone.

Can UNI Maintain A Bullish Streak?

The volume delta analysis shows an increasing volume of green bars, indicating volume delta net buying activity.

This is a positive confirmation that the recent breakout is for real. However, sustaining a higher volume will be equally important to keep this bullish streak going.

If volume declines as price rises, there’s weaker follow-through, and the risk of a pullback increases.

Looking at the overall structure, we can assume UNI/USD has found a local bottom around $10.50, and this breakout could cause the trend to reverse.