Uniswap’s UNI Could Drop a “Lot Lower” as Key Support Level Risks Breaking
Uniswap’s UNI token has been sliding lower over the past few days, and there’s no end in sight to its ongoing descent.
The strength of this selloff has been intense and has struck a serious blow to both investor sentiment and its market structure.
Many analysts are now noting that the cryptocurrency is at risk of seeing significantly further downside in the days and weeks ahead, which may come about regardless of how the entire market trends.
If UNI incurs a downtrend independent from the rest of the market, this could further perpetuate the weakness it has been experiencing as a result of its unrelenting selloff.
While sharing his thoughts on where the cryptocurrency may trend next, one trader observed that it is resting on a critical support level that has historically held strong.
He doesn’t expect it to continue holding in the near-term, however, as he believes that a serious selloff could be imminent due to it forming what appears to be a massive distribution pattern.
Unless the entire DeFi sector begins pushing higher in the days and weeks ahead, there’s a strong possibility that tokens viewed as index bets on the sector will continue being hit hard.
Uniswap’s Governance Token Incurs Intense Downtrend
At the time of writing, Uniswap’s governance token – called UNI – is trading down over 5% at its current price of $3.54. The cryptocurrency has been sliding lower over the past few days and weeks, with buyers being unable to absorb the intense selling pressure it has been facing.
This downtrend first began when it peaked at highs of $8.50 in the week following its launch. This uptrend was the result of massive hype and “fomo” that dissipated quickly, leading a trail of losses and bagholders in its wake.
Because many individuals received their UNI tokens via an airdrop, they may also be apt to sell as the price slides lower in order to take this free money off the table.
Analyst: UNI Could Be Poised for Serious Losses
One trader bearishly noted in a recent tweet that a distribution pattern is currently playing out for the Uniswap token, which could mean that serious downside is imminent in the days ahead.
He also notes that a dip below $3.50 could catalyze a much farther-reaching decline.
“Sadly this still looks like massive distribution. Lose $3.5 and it’s going a lot lower,” he said.
Image Courtesy of Mac. Chart via TradingView.
Unless the DeFi sector rebounds in the coming days, Uniswap’s embattled UNI token may soon see even further blood.
Featured image from Unsplash. Charts and pricing data from TradingView