Uniswap Potential for Price Breakout: Analyzing On-Chain Metrics
An analyst has recently discussed the potential for a price breakout in Uniswap (UNI) by examining several on-chain indicators. One key metric to consider is the number of addresses holding UNI tokens with unrealized losses.
Looking at the chart depicting the trend in this metric over the past few years, it is evident that approximately 308,910 Uniswap addresses, or 87.56% of the user base, are currently in a loss position.
Typically, when investors are in profit, they may be more inclined to sell and realize their gains. Conversely, a high number of holders experiencing losses could suggest a diminishing number of sellers in the market.
Considering the significant number of underwater Uniswap addresses, it could be inferred that selling pressure may have diminished and the asset is likely to avoid further decline, at least for now.
Increase in Large UNI Transactions: Potential Sign of Interest
The analyst also observed an uptick in the number of large UNI transactions, as shown in the chart below:
The chart indicates a recent surge in large transactions | Source: @ali_charts on X
These “large transactions” refer to transfers valued at least $100,000. As only whales and institutional entities have the capacity to move such substantial amounts in single transactions, an increase in their activity could signal their interest in the asset at its current price level. This could suggest that they are investing or positioning themselves ahead of a potential breakout in Uniswap.
Strong On-Chain Support for UNI Prices
Furthermore, the analyst highlights the presence of a robust on-chain support wall below the current UNI prices:
The chart displays various support and resistance levels based on on-chain data | Source: @ali_charts on X
In on-chain analysis, support and resistance levels are determined by the number of addresses or investors who purchased at those levels. Looking at the chart, it is evident that the range just below current UNI prices contains a significant number of holders, indicating potential buying pressure if the asset retests these levels.
The analyst notes that although Uniswap has established a key support floor at $4, there are two supply walls it needs to overcome to indicate a bullish breakout. The first wall is at $4.23, where 7,000 addresses hold 14.24 million UNI, and the second wall is at $4.45, where 2,000 addresses hold 10.28 million UNI.
UNI Price Analysis
Uniswap has been consolidating around the $4 level without significant upward movement for some time.
UNIUSD on TradingView
### News source: bitcoinist.com