Uniswap Price Soars 117% Following Governance Proposal for UNI Buybacks

Uniswap's price has experienced a significant bullish reversal, breaking free from a month-long downtrend, largely fueled by excitement surrounding a new governance proposal that could result in $38 million in monthly UNI buybacks.

Key Takeaways

Uniswap's price surged by 117% after breaking a months-long bearish trend.
The rise is linked to the "UNIfication" proposal, which aims to implement protocol fees for Uniswap v3 and v2.
Analysts estimate the proposal could generate around $38 million for UNI buybacks each month.
Current support levels hold around $8.15, but a possible retracement to $6.80 is on the horizon.

Uniswap price rallies 117% amid governance proposal introducing UNI buybacks - 1

Technical Analysis of Uniswap Price

Uniswap (UNI) has recently broken free from a descending channel that had characterized its price movement since mid-August. This breakout suggests a potential shift from a bearish phase to a bullish one. The price surged 117% from a low of $4.736 at the retest of the channel's lower boundary, reaching a peak of $10.30 accompanied by explosive trading volume. The EMA 9 (shown in cyan) has crossed above the EMA 21 (indicated in yellow), signaling a transition to short-term bullish momentum.

Although Uniswap's price has retreated from overbought territory, it maintains support around $8.15, identified by the 0.618 Fibonacci retracement level of the recent rally. While trading volume remains strong, the considerable distance of the price from the EMA cluster raises the likelihood of a deeper retracement towards the 0.382 Fib level, which sits around $6.80.

Uniswap price rallies 117% amid governance proposal introducing UNI buybacks - 2
Uniswap price 1D chart | TradingView

What Drove the Uniswap Price Rally?

The recent surge in Uniswap's price appears to be largely attributed to the "UNIfication" governance proposal. This initiative aims to activate protocol fees for Uniswap v3 and v2 pools for the first time, directing the resulting funds towards UNI buybacks. An analyst estimates that this could lead to the generation of approximately $38 million in UNI buybacks on a monthly basis.

The proposal entails a governance process spanning 22 days: it includes a 7-day comment period, a 5-day snapshot voting phase, and a subsequent 10-day on-chain voting and execution window. After its publication on November 11, this implies a likely conclusion around December 3.

For further reference, check out the discussion on Twitter from Hayden Adams, which provides additional insights into the proposal’s impact.
https://twitter.com/haydenzadams/status/1987990314997739625