Is Uniswap (UNI) undervalued?

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While things have started to look greener for the global crypto market, and Bitcoin and Ethereum in particular, Uniswap has been in an uptrend for the past seven weeks registering more than 150% gains. Let’s find out in today’s article what developments made Uniswap an anomaly in the otherwise dull bear market.

Post the Terra-UST crash in May and the slew of bankruptcies thereafter, the crypto market saw the worst of the bear market, with the total market cap plunging below the $1 trillion mark and all major crypto assets witnessing 70-90% losses. Currently, the market is undergoing a slow revival, with Bitcoin tip-toeing ahead of the $24,000 mark and Ethereum attempting another break above $1,800. 

Amidst all the market turmoil, Uniswap, the first decentralized exchange based on Ethereum, had been steadily charting an upward trajectory, having surpassed long-term trendline resistance forming since April. The token had witnessed a decline of over 70% since its April high before reversing the downtrend. 

<source: Binance, tradingview>

There are a number of on-chain indicators that explain the surge in price of the popular decentralized finance (DeFi) token:

1. Strong Whale Accumulation: Data from analytics firm Santiment reveals that the recent price surge has been mostly due to the increased whale accumulation and the increasing activity on its addresses. UNI whales have been accumulating a large number of UNI tokens since the Terra UST crash in May. This trend is being witnessed in whale addresses with 100,000 to 1 million UNI tokens, especially in the last two weeks. This trend was witnessed prior to the UNI token price rise to $9.69. These levels look to match those seen during May.

<source: Santiment>

2. Spike in the number of Active Addresses: The active traders seem to be returning to the decentralized platform. The 30-day MVRV or Market-Value-to-Realized-Value (an indicator that measures the ratio between the market and realized capitalization levels) has been up by over 22.5%. Santiment classified this spike well above the danger zone of +15%. However, Santiment pointed out that these numbers point to the return of mid-term traders and that long-term traders are yet to make a full comeback (this is measured in 365-Day MVRV). 

<source: Santiment>

The analytics firm also noted that UNI might face a correction for a week or two, but in the long-term, UNI is still undervalued. On the technical front, UNI seems to be performing well, with its RSI standing at a robust 65 and the price above its 200-day simple and exponential moving averages. UniSwap needs to make a move above the $10 psychological resistance to gather further momentum and reach the previous April highs. In case of a downturn, the previous bottom of $7.9 will act as immediate support.

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Disclaimer: This article was authored by Giottus Crypto Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.