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What Uniswap’s network growth can teach us about the current market

2min Read
What Uniswap’s network growth can teach us about the current market

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  • Uniswap experiences a sudden drop in network volume as the bulls take a breather.
  • Assessing UNI’s latest demand, where it is headed, and what to expect.

Now that the crypto market has delivered an overall bullish performance so far this year, it is important to assess the demand sources. Spot and derivatives demand has been quite active but more importantly, the DeFi segment has also performed quite well.

Uniswap, one of the largest DeFi platforms across the world, experienced healthy activity amid the market recovery. However, some observations may indicate that a sizable change is about to take place.

For example, Uniswap’s network growth just dropped out of its average 4-week range and is now at its lowest level seen in the same period.

Uniswap network growth and social volume

The above observation might offer some insights into the current market conditions, and hence the demand for Uniswap.

Most top cryptocurrencies traded on the DeFi platform experienced a surge in demand in the last few days. However, the demand is now slowing down, as the market anticipates the next move.

The outcome reflects the drop in transaction volume observed in the last 24 hours. This is more clearly reflected in the daily active addresses which also dropped significantly during the same period.

Uniswap active addresses and transaction volume

Source: Santiment

The aforementioned drop in network activity is reflected in address activity on the network. Both the sending and receiving addresses declined since 16 February, confirming the lower trading activity.

Despite this, the number of receiving addresses remained slightly higher than sending addresses.

Uniswap address flows

Source: Glassnode

Oscillations in the address flows are quite common and do not necessarily suggest a pivot. However, they may be aligned with such a market outcome, especially at resistance zones.

What about the demand for the UNI token?

UNI has been stuck in a zigzag price pattern since mid-January and has delivered an overall bullish performance in the last seven days. This reflects an attempt to overcome the RSI mid-range.

UNI price action

Source: TradingView

Interestingly, the prevailing demand for UNI we have seen so far has been headed into DeFi. This is evident by the rise in the supply of UNI held in smart contracts which have increased substantially in the last four weeks.

Uniswap UNI supply held in smart contracts

Source: Glassnode

Regardless, UNI is still heavily influenced by the overall crypto market conditions.

This means it will likely continue to experience strong demand if the market remains bullish. On the other hand, a return of bearish pressure may trigger some more downside.


Michael is a full-time journalist at AMBCrypto. He has 5 years of experience in finance and forex and more than two years as a writer in the crypto and blockchain segments. Michael's writing at AMBCrypto is primarily focused on cryptocurrency market news and technical analysis. His interests include motorcycles and exotic cars.
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