Uniswap (UNI) adjusts after a 40% increase: Will the uptrend continue?

Uniswap (UNI) is currently trading around 7.66 USD on Friday morning, showing signs of stability after a breakout of over 40% earlier in the week. The governance proposal “UNIfication” announced by Uniswap Labs and the Uniswap Foundation on Monday has breathed new life into the ecosystem, igniting a wave of optimism as whale activity increases and demand from the derivatives market remains strong — all contributing to the expectation of a more sustainable bullish trend.

The ‘UNIfication’ proposal boosts market sentiment

The price of Uniswap started the week with a strong breakout, rising more than 40% on Monday and closing at 9.34 USD. This explosive momentum came right after founder Hayden Adams and key leaders of the Uniswap Foundation announced a proposal to merge the organization and implement the UNI token burning mechanism.

The proposal named “UNIfication” aims to activate protocol fees and use this revenue to burn UNI, thereby putting the token into a deflationary state. This is seen as a major turning point for the Uniswap protocol as well as the UNI investor community, who have long awaited the activation of the “fee switch” – a mechanism that allows a portion of the transaction fees that originally belong to liquidity providers to be transferred to the Uniswap treasury or allocated to UNI holders.

Not only that, “UNIfication” also proposes to burn an additional 100 million UNI from the treasury and redirect the sequencer fees of Unichain to serve the same goal. In terms of product, this plan introduces the (Protocol Fee Discount Auctions) and aggregator hooks mechanism, allowing Uniswap v4 to operate as an on-chain aggregator, collecting fees from both external liquidity sources. Adams commented: “This proposal lays the foundation for the next decade of growth for Uniswap.”

However, after a strong rebound at the beginning of the week, UNI has corrected by more than 20% and is currently finding support around 7.66 USD on Friday. This movement indicates that the market may be “gaining momentum” before entering a new bullish phase.

On-chain data and derivatives support bullish prospects

Santiment's Supply Distribution data paints an optimistic picture for Uniswap, as some whale groups are quietly increasing their accumulation of UNI. Specifically, wallets holding between 100,000 and 1 million LINK (red line) and between 10 million and 100 million LINK (blue line) have accumulated a total of 16.03 million LINK during the period from Sunday to Friday. In contrast, the wallet group holding between 1 million and 10 million LINK (yellow line) has offloaded 15.09 million LINK. This contrasting trend suggests that the second whale group may be under pressure to take profits or liquidate, while the first group is seizing the opportunity to accumulate UNI at attractive price levels.

Uniswap Supply Distribution Chart | Source: SantimentIn the derivatives market, the bullish sentiment is clearly reflected in the Long/Short ratio of UNI on Coinglass, reaching 1.10 today — the highest level in over a month. The ratio exceeding 1 indicates that the majority of traders expect UNI's upward trend to continue.

Uniswap buy/sell ratio chart | Source: Coinglass Meanwhile, the open interest (OI) of UNI Futures contracts on exchanges surged to 782.44 million USD on Monday — the highest level since mid-August — before adjusting down to 583.15 million USD on Friday. The significant increase in open interest indicates that new capital is flowing into the market, reflecting a rise in buying activity and an increasing level of participation from traders. Typically, an expansion in open interest is a signal that bolsters bullish sentiment, suggesting that UNI's upward momentum may still have room to grow if market momentum continues.

Uniswap open contract chart | Source: Coinglass## Uniswap price forecast: UNI finds support at a key area

The price of Uniswap (UNI) surged more than 40% on Monday, breaking through the downtrend line that had persisted since mid-August. However, this rapid upward momentum faced resistance as UNI corrected in the following two days, after hitting the Fibonacci level of 78.6% at 10.07 USD ( based on the peak in August around 12.30 USD down to the bottom in October near 2 USD). As of the time of writing on Thursday, UNI is slightly recovering and finding support around the 200-day EMA at 7.61 USD.

If this important EMA line continues to hold, UNI has the potential to extend its upward recovery towards the weekly resistance area at 12.01 USD.

Daily chart of UNI/USDT | Source: TradingViewOn the daily frame, the RSI indicator is at 58 — above the neutral threshold of 50 — indicating that bullish momentum is being reinforced. The MACD also recorded a bullish crossover from last week and has maintained it until now, further supporting the upward outlook.

On the contrary, if UNI closes below the 200-day EMA at 7.61 USD, selling pressure may increase and pull the price back to the daily support zone at 6.04 USD.

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