Uniswap moves from strength to strength; UNI reacts by…

• UNI reserves on exchanges reached new highs. 
• Decline in whale interest, falling MVRV ratio, and reduced user activity raised concerns about UNI’s performance.

Uniswap’s [UNI] reserves on exchanges have surged to record levels, as indicated by data from analyst Kate Young. The increased quantity of UNI held on centralized exchanges could be interpreted as a bullish sign. This suggested heightened interest and demand for the token.

Realistic or not, here’s UNI’s market cap in BTC’s terms

On the other hand, a substantial reserve of UNI on centralized exchanges could also be viewed as bearish. This could be due to the possible intention to sell or exit positions.

Whales swim away

Despite UNI’s rising reserves on exchanges, the number of whales holding UNI has seen a decline. This decline in whale interest may have adverse effects on the price of UNI.

When whales reduce their positions, it often leads to increased selling pressure and can result in downward price movement. Additionally, high whale interest could also lead to centralization, potentially making retail investors more vulnerable to market manipulation.

The MVRV ratio for UNI, which compares the market value of the token to its realized value, experienced a significant decline at the time of writing. This suggested that most holders were not profitable at press time, as the price of UNI has dropped materially.

The declining MVRV ratio indicated that the selling pressure on UNI had fallen, which could potentially create an opportunity for a price recovery.

However, it is worth noting that the Long/Short difference for UNI reveals the prominence of short-term holders compared to long-term holders. This imbalance may indicate that traders have a shorter-term outlook and are more inclined towards quick trades rather than long-term investments.

Source: Santiment

Uniswap traders turn cynical

Examining trader sentiment, data from Coinglass indicated that the number of short positions outweighed the number of long positions for UNI. This suggested that there was a prevailing bearish sentiment among traders in the short term.

Source: coinglass

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Shifting focus to the protocol itself, there has been a notable decline of 49.8% in the number of daily active users on the Uniswap protocol over the past month.

The reduction in daily active users has resulted in a significant decrease in generated fees, which can impact the sustainability and growth of the UNI ecosystem.

Source: Token Terminal