Will Uniswap Bears Seize Control as Bulls Defend $4 Support Level?
The bearish pressure on Uniswap (UNI) is growing as the bulls fiercely defend the $4 price level of support. Although while UNI made a solid start to September, critical on-chain metrics suggest that the bulls may soon run out of steam.
Uniswap Holders Accumulate in Exchange Wallets
Uniswap price has gained 7.14% in the first week of September, but there is a risk of a substantial sell-wall approaching. According to CryptoQuant data, Uniswap bears have been depositing tokens to their exchange wallets since the altcoin market collapse on August 17.
The chart outlines that UNI Exchange Reserves have rapidly increased from 43.97 Million tokens on August 17 to 47.4 Million UNI on September 7, the highest since then Uniswap’s launch in 2018. This indicates that holders could be looking to sell or swap for other assets in the short term.
Since the Exchange Reserves started growing, the UNI price has dipped by 29%. If the bulls do not strengthen their position, further sell-pressure could lead to another price correction.
Flat Market Demand and Intensifying Bearish Headwinds
Uniswap has struggled to attract network demand in recent weeks, regardless of steady market performances driven by price speculators. According to Santiment, the last time Uniswap had up to 1,200 active users was around July 31.
The daily network activity rate has gradually declined ever since, with a peak of 805 addresses on August 31 and a low of 502 on September 3. Higher user participation typically indicates greater demand for the UNI token.
If Uniswap fails to see a whole lot of increase in network demand while Exchange reserves reach an record-breaking peak, the risk of bearish control grows.
UNI Price Prediction: Bears Eyeing $3
From an on-chain perspective, the mounting Exchange Reserves may trigger a whole lot of price reversal towards the $3 range.
The In/Out of Money Around Price data supports this prediction, showing that bears will face challenges around the $3.75 territory. Nonetheless, if they defend their positions, a rebound could occur.
On the other hand, if bearish holders continue to exert sell pressure, the price could fall below $3. Conversely, the bulls could regain control and defy the negative prediction by reclaiming $6.
Although while it is unlikely under the present on-chain circumstances, the UNI price could sooner or later reach $6 if the resistance level at $4.60 does not hold.
Hot Take: Uniswap’s destiny hangs in the balance as bears grow stronger and market demand remains flat. The present on-chain indicators suggest that bears could take control and drive the UNI price down to $3. Nonetheless, if the bulls manage to defend key support levels and increase network demand, the price could rebound and even reach $6. The coming days will be critical in determining the direction of Uniswap’s future.
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