Uniswap Whale Sells $10M in UNI – Is the $4 Support at Risk?

In light of the recent market downturn and weakened price structures, Uniswap [UNI] has dropped to a two-year low. The cryptocurrency saw a decline to $4.1, a price point not witnessed since November 2023, before showing a slight recovery.

Key Takeaways

Market Dip: Uniswap reached a low of $4.1, but has since recovered slightly.
Whale Activity: A long-term holder sold 2.49 million UNI for $10.62 million after holding the tokens for five years.
Increased Selling Pressure: A surge in selling activity has been observed, contributing to market instability.
Risk of Support Breach: The $4 support level is at risk, with potential for prices to slide to $3.8 if selling continues.

Uniswap whale dumps $10M in UNI: Is $4 support at risk?

At the time of writing, UNI is priced at $4.15, reflecting a loss of 1.14% in daily trading, indicative of heightened market volatility.

Uniswap Whale Dumps 2.49M UNI

In response to the significant drop in UNI's price, a long-term holder, referred to as a "whale," decided to sell off their entire UNI holdings. According to data from Arkham, this whale, who had been inactive for five years, offloaded 2.49 million UNI, amounting to a sale worth $10.62 million.

Uniswap whale transfer

Source: Arkham

This whale realized a profit of $1.72 million from the sale, representing just a 19% return over five years. Such actions by whales during a market downturn often highlight a lack of confidence and fears of further price declines.

Rising Selling Pressure

In addition to the whale activity, Uniswap witnessed a considerable sell-off from other traders on January 30th. Data from CryptoQuant showed that the inflow to exchanges rose to a two-month peak of 4.2 million UNI, before seeing a marked decline shortly after. Simultaneously, the outflow from exchanges was recorded at 1.7 million UNI.

Uniswap exchange netflow

Source: CryptoQuant

The significant exchanges inflow has led to a subtle increase in the Exchange Supply Ratio, now at a two-month high of 0.09, indicating heightened distribution and an increased risk of further market dumping.

Uniswap exchange supply ratio

Source: CryptoQuant

Historically, such surges in market supply have resulted in reduced scarcity, inadvertently adding further pressure for prices to decrease and potentially paving the way for lower price levels.

Is $4 Support Under Threat?

The significant decline in Uniswap's price has prompted both retail and trader investors to sell, contributing to a further downward trend. As a result, the altcoin’s Relative Strength Index (RSI) has plunged deeper into oversold territory, now resting at 27.

When the RSI reaches such low levels, it often indicates strong seller dominance in the market. Concurrently, Uniswap’s Relative Vigor Index (RVGI) has dropped to -0.12, following a bearish crossover.

Uniswap RSI & RVGI

Source: TradingView

Both the RSI and RVGI at these extreme lows illustrate a significant downward momentum with sellers in control of the market. Such market conditions frequently indicate a risk of further declines, suggesting that if the selling trend continues, UNI could drop below the $4 support level, potentially reaching $3.8.

Conversely, if investors view this as a buying opportunity and enter the market, it could maintain the price above $4, possibly leading to a recovery towards $4.8 if a market reversal occurs.

Conclusion

In summary, while the recent activity — particularly by the whale — signals increased selling pressure and a potentially weakened support structure, the market remains fluid. Traders and investors will need to remain vigilant as the situation unfolds, keeping a close watch on the critical $4 support level for further potential price movements.