25 April, 2024

Uniswap Liquidity Providers are Betting Big on Ethereum: Glassnode

07 Sep, 2023

23 Nov, 2023

  • Glassnode data reveals that 30.4% of Uniswap’s USDC-ETH pool is bullish on Ethereum.
  • A second liquidity tier in Uniswap leans on a significant +23.7% upside for ETH.
  • Liquidity heatmaps show concentrated positions often trail actual Ethereum prices.

The liquidity landscape of Uniswap V3, especially in its most traded pool, USDC-ETH (0.05% fee tier), reveals a mood of optimism among liquidity providers (LPs) for the prospects of Ethereum. According to analytics provider Glassnode, roughly 30.4% of the pool’s liquidity sits within an 11% price range, suggesting an asymmetric bias toward an upward market movement.

At first glance, liquidity seems to dance with the price of Ethereum, clustering within specific ranges that seem to mirror real-time price action. The liquidity heatmap, a graphic that plots liquidity as a function of price and time sheds light on the tactical shifts providers make in response to market conditions, according to Hackernoon, a platform for technologists to read, write, and publish.

Uniswap liquidity heatmap, Source: Hackernoon

Each pixel of brightness on this chart corresponds to a surge in liquidity at that particular price point, on that particular day. While higher volatility spreads out the liquidity over a broader price range, the distribution is far from even. In a sea of minuscule changes, some major players are so dominant that their contributions form stark, bright rectangles on the heatmap.

Interestingly, Glassnode revealed a secondary liquidity concentration, adding another strategy layer to the liquidity pool. This reserve appears to cushion against an 8.5% downside while preparing for a 23.7% upside. The LPs are not just passive actors; they’re calculating optimists who seem to expect more good days for Ethereum.

As of today, Uniswap’s native token, UNI, is trading at $4.44, with a daily trading volume of approximately $59.9 million. It holds the 26th rank on CoinMarketCap, boasting a live market capitalization of around $2.56 billion. While these numbers are snapshots, the liquidity heatmap and dynamic dance offer a more evolutionary market view. The weighted optimism among Uniswap V3 LPs might be another promising indicator for Ethereum, beyond the daily swings and market rankings.


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