Why Uniswap (UNI) Has Healthy Trading Volumes And High Liquidity Despite Disruptive Bear Market

1 min read

It’s interesting when the favorite child falls out of favor and grace with daddy dearest for whatever reasons. Finally, the light shines on the other child or children and they can enjoy the limelight for a while.

CeFi is the favorite. Or was the favorite? Emphasis on ‘was’. And then one day, poodibib poodiboom, Defi was embraced with open arms again when things went pear-shaped in Crypto over at CeFi recently.

The market uncertainty is causing a lot of people to step back, take a breather and examine everything properly again.

Crypto crashes tend to do that for people.

Healthy Trading Volumes Even In Disruptive Bear Market

A recent Grayscale report about the ongoing bear market helps to put Uniswap’s potential into perspective. It notes that Uniswap has more depth for major cryptocurrency pairs than the top centralized crypto exchanges.

Uniswap managed to maintain healthy trading volumes in the last couple of months amid a disruptive bear market. A healthy outcome but events that unfolded during the bear market underscore its ability to become a bigger juggernaut in the DeFi space than it already is.

This includes Binance which is currently the largest crypto cap by volume. This is because its secret weapon is higher liquidity and that is how it managed to outperform the competition.

The collapse of centralized finance platforms within the blockchain industry contributed a great deal to the selling pressure in the last few months.

Investors Uncertain About CEFI Staking And Liquidity

Many investors have started to view CEFI staking and liquidity platforms as riskier. This outcome has supported the flow of liquidity to DeFi platforms and this puts Uniswap at an advantage.

The liquidity flow in favor of decentralized finance platforms is expected to boost Uniswap’s UNI token’s performance during the next market cycle.

However, the same Grayscale report suggests that the bear market might extend at least for another four to five months. This means UNI’s price action might remain subdued.

UNI is still up by roughly 92% from its current 2022 lows, with a $6.70 price tag at press time. It might shed some of its gains in the short-term, especially if the Grayscale projection about the bear market is accurate.

Source: TradingView

UNI’s support is currently holding at the 0.382 Fibonacci retracement level for now. The short-term outlook remains uncertain though. There is some glimmer of hope for the bulls now that network growth appears to be picking up after falling to its lowest 4-week levels on 23 August.

Source: Santiment

UNI’s long-term outlook still favors the bulls, especially taking into account the liquidity flow and its lead as one of the top DeFi platforms. Its long-term performance has so far delivered healthy gains as indicated by the steady growth in mean coin age.

Source: Santiment

Unfortunately, the situation is different for the realized capitalization metric which fell to the lowest 12-month low in July. This is because most of the buyers bought when the hype was near the peak, and the bear market left them in the red.

Originally published here


Chris Munch

Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.