Uniswap (UNI) Analysis: TVL Falls 44%, Bulls Firm

At the time of writing (Nov 17, 2020), the UNI price is trading at $3.67 down roughly four percent against the USD. It is also trailing BTC and ETH by six percent in the last trading day.

UNI Market Overview

The token’s performance has been impressive in the last two weeks.

After bottoming up in early November, its price has nearly doubled from around $2.1 registered on Nov 4 close. It peaked on Nov 15 before prices slid correcting the over-extension of Nov 14 and the climactic rally of Nov 13.

Notably, backing the rally was high trading volumes pointing to decent participation. From early November, the average trading volumes were significantly higher after the plateauing of October.

While there has been a contraction of price in the daily chart, a top-down analysis suggests a possible start of an upswing. Gains of the past two weeks confirmed the bottoms of late October, revealing bulls targets of September 2020 highs of around $8.5.

Uniswap (UNI) Market Movers

For this lofty target, UNI’s fundamentals ought to be high.

A look at Defi Pulse points to mass migration by liquidity providers.

Uniswap is the world’s largest decentralized exchange (DEX) facilitating the exchange of Ethereum-based tokens.

By using an Automated Market Maker (AMM) model, the exchange is heavily reliant on the community. For their participation, there is an incentive model.

The UNI ERC-20 token is used for governance. LPs receive the token as a hedge against impermanent loss. Besides, they also receive a share of trading fees, 0.30 percent shared equally by LP supplying liquidity in any pool.

According to statistics from Defi Pulse, the Total Value Locked (TVL) in Uniswap is down 44 percent falling from $3 billion on Nov 14 to $1.6 billion today, Nov 17, 2020.

Possible explanations are incentives from competing protocols. For example, Bancor announced a BNT Liquidity Mining (LM) program to attract new liquidity to their pools and to “create stickiness” incentivizing long-term liquidity provision.

Also, Sushiswap just revamped their interface and announced new APRs for their pools.

🌽 Bitcorn wBTC/ETH 119%
🐌 Circle Snail USDC/ETH 52%
🐢 Tether Turtle USDT/ETH 51%
🦆 Donald Dai DAI/ETH 44%

Let's feast 🍣

— SushiChef (@SushiSwap) November 17, 2020

According to Chef Nomi, the protocol has new rewards with a 1-click LP migration.

Uniswap (UNI) Price Analysis

Aforementioned, the UNI price is down three percent against the USD in the last 24 hours.

From the daily chart, the uptrend is firm. Gains of the last two weeks reversed losses of October 2020. Therefore, a top-down analysis in the weekly chart reveals a double-bar bull reversal pattern.

Despite the current correction, bulls appear to be in control. UNI prices are trending within Nov 13 bull bar. Price action in the past three days has been tepid, with neither bulls nor bears taking charge.

From an effort versus result analysis, buyers are in control. As such, every low is technically a buying opportunity for aggressive traders. Immediate support is the middle BB. A close above last week’s high of $4.33 may trigger demand towards $5.56 in the medium term.

Conversely, losses below the Nov 13 low of $2.90 and the middle BB could trigger a sell-off back to $2.7 and $2.3, the 61.8 and 78.6 percent Fibonacci retracement levels of the Nov 5 to Nov 17 trade range.

Chart courtesy of Trading View

Disclaimer: Views and opinions expressed are those of the author and is not investment advice. Do your research.