Uniswap [UNI] was in the news recently after the Securitize announcement. AMBCrypto reported that the asset tokenization platform will be plugging BlackRock’s tokenized treasury product BUIDL into their smart protocol.
A Bitwise spot ETF application was also in the news recently. The price reaction after the BUIDL integration news was instant. Within two hours, UNI rallied by just over 40%, but a sharp correction was seen later on the same day.
This indicated that the token had experienced a sell-the-news type of event. The high volume price surge exhausted the hopeful bulls. Bears took full advantage of the move to sell their holdings.
After the short squeeze, demand dried up and long positions started closing. The falling OI revealed that short-selling wasn’t market-wide and aggressive. Nevertheless, there was no more fuel to go higher and at press time, Uniswap prices were once again below the $4.2 key EMA resistance.
Can Uniswap reclaim the $4.6 highs?
Source: Glassnode
The Cost Basis Distribution heatmap revealed that a sizeable amount of UNI was acquired at prices just under the $6-level. Another hefty chunk had its cost basis at $7.3-$7.4.
The cost basis areas tend to mark strong support/resistance levels. The closest supply zone was at $3.95-$4.
The short-lived rally to $4.6 was likely used to sell UNI at break-even or slight profits. Until the $4 supply zone is reclaimed, swing traders and investor bias can remain bearish.
Source: UNI/USDT on TradingView
The 1-day chart highlighted the bearish trend since late-November. The price set a series of new lows and showed that it was unable to break local highs over the past six weeks. This could be another sign of seller dominance.
In other news, the decentralized exchange saw an uptick in trading volume in the first week of February, according to DeFiLlama data. This trend peaked on 05 February with a value of $5.22 billion. Since then, the volume has again fallen to mid-January levels – Reaching $842 million on 13 February.
The lowered trade volume will result in a lower burn rate, but this is unlikely to materially affect the price until the low volume persists for a longer period of time.
Final Summary
- The swift rally and immediate setback last week was a classic “sell the news” type event.
- UNI’s downtrend is set to persist despite the positive ecosystem developments.
Source: https://ambcrypto.com/analyzing-why-unis-upside-will-remain-capped-despite-etf-buidl-updates/