As Uniswap’s exchange flow turns positive, is a UNI dump in sight?

• More UNI flowed into exchanges than out.
• The current token value could decrease further.

The exchange netflow position change of the governance token of the Uniswap [UNI] protocol surged to a yearly high, according to data from Glassnode. The position change is an indicator that refers to the difference between the number of tokens flowing into and out of exchanges.

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The times of wary spikes

As for UNI, the metric has been on the positive side since 2023 started. And over the last 30 days, it maintained the status quo.

When the net position change is positive, exchanges have more inflows than outflows. When the metric ranges around the negative region, it implies that investors were withdrawing their tokens for long-term keeps, or spending them.

Thus, this current state suggests a significant movement of tokens, which could trigger potential selling pressure.

While the increased flow change may raise concerns about a potential UNI dump, it is important to approach this with caution and consider multiple factors.

This is because the change in net position alone does not provide a conclusive indicator of market direction or investor sentiment.

In addition, a look at the Network Value to Transaction (NVT) signal showed that the metric increased to 120.86 as of 13 May.  

Introduced in 2017, the NVT signal reveals the moments where the market value and network usage are far apart or close. Since this indicator was high, it means that the UNI value was inflated considering the current market cycle.

Bears may have the day

As per the daily chart, the Relative Strength Index (RSI) was 41.94. The indicator measures an asset’s momentum. When the value rises above 70, it indicates the asset is overbought. When it decreases below 30, it signals an oversold situation.

Therefore, the RSI value of UNI suggests that there was no strong support for bullish momentum. Instead, it was closer to the bearish state.

Furthermore, the Directional Movement Index (DMI) showed that the -DMI (red) value was higher than the +DMI (green). The indicator shows the direction an asset would most likely move. But this is also dependent on the Average Directional Index (ADX).

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 At the time of writing, the ADX (yellow) was 19.22. For this indicator to show solid directional support, the value has to hit 25 or above. Since this was not the case, it means that the bearish projection might not be severe.

Source: TradingView