Uniswap’s $UNI Sees Major Withdrawals and Milestone Trading Volume Amid Mixed Market Sentiment

Uniswap, the decentralized finance (DeFi) behemoth, is confronting an intricate market conundrum in which its record-smashing wins coexist with worrying, bearish-tinged signs.

On Tuesday, a jaw-dropping $25 million worth of $UNI tokens were withdrawn from exchanges, representing the largest outflow since 2021. And while this alarming move across a key governance token wasn’t mentioned by anyone on the Uniswap team in their latest series of Twitter Spaces chats, it obviously has some investors very concerned about what’s going on – or not going on – with the DeFi protocol.

With the market potentially facing volatility, the performance of Uniswap prompts inquiries into where both its governance token, $UNI, and the DeFi ecosystem at large might be headed.

Although there are unmistakable signs that investors are being cautious, Uniswap is also celebrating a striking accomplishment. The $UNI token has been doing incredibly well on Base, which is Ethereum’s Layer 2 network that has rapidly gained momentum in recent months. This past January, Base’s monthly trading volume for $UNI hit an all-time monthly high of $17.72 billion. This pushes the total trading volume across the platform up to $124.01 billion and underscores how much Base really matters in the thriving world of Uniswap.

Base has grown quickly because it can provide good, fast, cheap transactions—compared to Ethereum’s mainnet, at least—and that makes it an attractive place for traders and liquidity providers. So far, in less than six months, it has accumulated a total trading volume that exceeds $124 billion. And while that definitely is not Uniswap itself—Base is the layer-2 for Uniswap—the presence of this trading volume is definitely beneficial for the Uniswap protocol.

If you are an investor or trader and seek a more scalable DeFi platform, look no further than Base. Its main reason for being—an infrastructure that allows Uniswap to thrive—undercuts any speculative or bearish sentiment in the market. The two DeFi leaders carved out $80 million in reportable volume in August. If Uniswap can do this while the whole crypto market cap hovers around $1.2 trillion, what will it accomplish in a bull market?

Even with the increase in trading volume, Uniswap is also confronting some troubling indicators. On Tuesday, exchanges witnessed $25 million worth of $UNI tokens being withdrawn, the biggest outflow of tokens since 2021. This situation arises while Uniswap has not been able to generate much buy pressure, especially in the aftermath of the last upgrade to the V4 protocol on the Uniswap platform.

Investor withdrawals show that they are becoming more cautious about holding $UNI amid ongoing market uncertainty. The price seems to be facing the same barrage of factors as the rest of the crypto space. And you know when a coin is being cited for not doing well because it’s being mentioned in conjunction with price volatility and regulatory concerns.

This absence of buying pressure sends a worrying signal to $UNI holders. As the whole DeFi market might be said to be under threat from fluctuations, the difficulty that Uniswap manifests in generating demand for its token could put it in the vulnerable position of being a DEX without the kinds of tailwinds that drive it higher. When fluctuations threaten to knock DeFi down, Uniswap might face severe challenges that could even lead to its not being a DEX that offers strong prospects for sustained growth and the kinds of highs that have characterized it lately.

Although trading volumes and growth on Base are very impressive for Uniswap, the direction of the token’s price movement suggests that substantial bearish pressure could be building. The market now seems to be engaged in a serious debate over what the $UNI token is actually worth, with some folks looking at possible support levels as indicators of where the increasingly volatile price might stabilize.

At present, the price of $UNI is probing essential support areas, as traders watch closely the levels around $8.40, $8.00, and $7.75. Should the price fail to maintain these support areas, it seems that it would be setting itself up for a bearish breakout, which could move it downward in the near term—days or weeks, depending on market conditions.

Withdrawals, absence of buying pressure, and $UNI’s technical outlook create the perfect trifecta to suggest a bearish breakdown is on the way. For traders and investors, watching these key support levels will be crucial. If Uniswap can’t hold them, it might not only see a breakdown but also a significant downswing in its price.

$UNI – Same, pretty bearish area