Uniswap in 2024: Despite $1.7B in Swaps, Price Plummets Amidst Market Pressure

Although Uniswap (UNI) successfully processed a remarkable $1.7 billion in swaps on January 3, the start of the year has been tough for the DeFi token. Its value dropped sharply, falling around 20% within a week.

Unlike other altcoins in the ecosystem, the expected approval of a Spot Bitcoin ETF has not sparked a rebound in the DeFi asset. This drop aligns with reduced active addresses and trading volumes, while on-chain metrics suggest a downward trend for the token

A significant element driving this downturn is the escalating presence of UNI on cryptocurrency exchanges. Recent data reveals that Uniswap’s supply on these platforms has risen to 6.92% of its total, approaching a peak not seen in the past six months.

Consequently, this increased presence on exchanges could heighten selling pressure. Historically, a rise in selling pressure often leads to reduced asset prices. This trend could elucidate the 20% drop in UNI’s price over the past week.

UNI supply on exchanges and price. Source: Santiment

Furthermore, the bearish outlook is underscored by two critical on-chain metrics. There has been a significant decrease in active addresses and trading volumes for Uniswap since the beginning of January.

According to data from Santiment, these metrics are critical as they mirror the demand and relevance of an asset in the market. When these factors combine with the rising exchange supply, they reinforce the negative sentiment surrounding UNI.

UNI active addresses and volume. Source: Santiment

However, it’s noteworthy that Uniswap achieved a significant milestone in early January despite these challenges. The platform completed swaps worth $1.7 billion on January 3. Yet, this achievement did not translate into a recovery in the asset’s price. Currently, UNI’s price stands at $6.01, marking a 0.38% increase over the past 24 hours. Over the past week, it has experienced a 20.40% price decline.

Significantly, this situation illustrates the complex dynamics of the DeFi market. While substantial transaction volumes often indicate robust activity, they do not always correlate with positive price movement. Hence, investors and market participants need to consider various factors, including on-chain metrics and exchange supply, when evaluating the health and potential of DeFi assets like Uniswap.