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Disclaimer: The information presented does not constitute financial, investment, trading or other advice and is solely the opinion of the author.
- Uniswap saw a decline from near six-month highs.
- A drop below $5 was a scenario traders had to be prepared for
Uniswap [UNI] Uniswap X reportedly saw its total trading volume cross $1 billion. This indicated an increased demand for open-source trading protocols by market players. It also saw an increase in development activity.
The benchmark was so high that it ranked second in number in the DeFi sector development activity in recent days. Uniswap also wanted to lower gas rates to attract more users, with v4 making plans to make swaps and pools cheaper.
The reach of almost six months was still relevant for UNI
Source: UNI/USDT on TradingView
Uniswap prices saw a strong rebound last month. The bulls forced a 71.8% gain in just under forty days, pushing UNI from $3,845 to $6.6. In recent days, Uniswap prices have fallen slightly and were trading at $6.2 at the time of writing.
The one-day price chart was healthily bullish. The quick gains from $4.9 to $6 left a large gap in fair value that could be filled in the coming days or weeks.
The Fibonacci retracement levels (light yellow) also agreed with this idea. They showed that a deeper pullback to the $4.9 level, the 61.8% retracement level, could be expected.
At the time of writing, the market structure and momentum were clearly in favor of buyers. On-Balance Volume (OBV) struggled to break through local resistance, but Chaikin Money Flow (CMF) indicated strong capital flow into the Uniswap market.
The indicators were bullish, can the same be said for the on-chain metrics?
Source: Santiment
The average coin age dropped dramatically in mid-October. It started to recover later that month and moved higher, but nowhere near the September highs.
This suggested that despite Uniswap’s price increase, network-wide accumulation was weak. On the other hand, the increase in the number of active addresses could help explain the increased demand for the token.
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The MVRV ratio was at a value last observed at the end of July 2022.
This meant that greater selling pressure from holders taking profits on their UNI holdings was very likely. This could lead to a deep retracement.