Uniswap: How Significant Selling Pressure Might Reverse UNI's Recent Price Surge

Recently, Uniswap [UNI] has seen a price surge due to significant accumulation from institutional investors. However, selling pressure may pose challenges for UNI's continued rally. Despite some encouraging metrics, bearish indicators could lead to a price correction.

Key Takeaways

On November 17, Lookonchain reported that a wallet connected to Amber Group acquired 1.41 million UNI tokens, with 1.39 million of those being deposited to Coinbase Prime for custody.
This accumulation is positive, as UNI experienced a rally from $4.73 to $10.3 earlier in November, breaking a crucial swing level at $8.6 and changing the market structure to bullish on the 1-day timeframe.
After a predicted dip to $6.86 occurred, Uniswap has since rebounded by 8.9% over four days, but now faces resistance at the $8 level.
Although current on-chain metrics suggest potential gains, persistent selling pressure could be a concern.

Uniswap - How heavy selling pressure might undo UNI's latest price breakout

Challenges for Uniswap Bulls

Uniswap Santiment

On November 11, while Uniswap was trading at $10, there was a notable decline in the mean coin age, paired with a rise in the age consumed metric. These combined indicators suggest an influx of previously dormant tokens moving on-chain, typically signifying selling intent that may lead to a price correction back to $6.86.

After this dip, it was anticipated that the mean coin age would trend upward again; however, it has continuously decreased. This trend indicates that on-chain investors may lack confidence in UNI's bullish prospects. The MVRV ratio also dipped into negative territory, indicating that most holders are currently incurring losses.

This low confidence among holders creates a scenario where any potential price rebound might encounter significant selling pressure as investors look to break even.

Additionally, the exchange net flow metric for UNI showed large inflows on November 10-11, aligning with AMBCrypto's assessment of increasing sell pressure.

Uniswap Supply Distribution

On a positive note, the number of wallets holding between 10,000 to 1 million UNI tokens has grown over the past two months. While not all whale wallets have increased their holdings, their activity remains noteworthy.

Uniswap 1-day Chart

Despite the bullish daily market structure, the On-Balance Volume (OBV) is currently in a significant downtrend. This decline, characterized by a lower low during the recent price retracement, underscores the heavy selling pressure facing UNI. Unless demand significantly increases, sustaining a rally beyond the $8 to $8.6 resistance zone could prove challenging.