The post Uniswap UNI On-Chain Trading Signals by Alex Kiriakides appeared first on Benzinga. Visit Benzinga to get more great content like this.
Uniswap is the second largest decentralized exchange (DEX) on the Ethereum blockchain. The Uniswap platform allows crypto users to trade ERC-20 tokens in a mostly censorship-resistant way and without a central intermediary.
Uniswap is also a powerful automated market maker in decentralized finance (DeFi). Automated market makers are a concept pioneered by Uniswap that allows users to trade tokens in a peer-to-peer way using algorithms to set market prices. Users of the Uniswap platform can supply their tokens to a liquidity pool and earn rewards for their contribution from trading fees.
The supply and demand of the tokens encapsulated in these liquidity pools coupled with the algorithms used on the platform to stabilize pricing are what allow Uniswap to thrive in a decentralized manner.
Uniswap has amassed over $1.1 trillion dollars in trading volume throughout its life span and executed over 108 million trades. Because of its immense popularity in September 2020, Uniswap minted the UNI governance token for the Uniswap platform. This benefit allows users to vote on governance proposals, fund grants and earn from liquidity pools.
If you are interested in trading Uniswap but don’t know where to start, then looking at raw data recorded on the blockchain might be your best bet. Potential buyers can access this information because of the blockchain’s public transaction records that can be used to create these trading signals.
These Uniswap trading signals can help provide insight into volatile price action and paint a picture of what the future of a token’s price may look like. More precisely, the on-chain trading signals look at crypto wallet balances, holder concentration and exchange inflows and outflows. No signal or indicator is flawless, however, and they shouldn’t be used as a crystal ball.
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UNI On-Chain Trading Signals Analysis
Holders Making Money at Current Prices
A majority of all Uniswap holders have unrealized losses on their UNI positions. This metric suggests a few things. It most likely shows that the cryptocurrency market on the macro time frame is in bearish territory and market sentiment is low. It also could serve as an excellent signal of the growth of Uniswap in the next cryptocurrency cycle, meaning that investors who started investing in Uniswap before the 2021 bull run are sitting in profit, but the vast majority of holders are HODLing currently and don’t want to realize a loss.
Concentration by Large Holders
Concentration by large holders is one of a few trading signals that likely should be considered whenever trading Uniswap and other altcoins. An 86% concentration by large holders of UNI indicates that Uniswap holdings are not evenly distributed amongst its holders. This level will likely decrease eventually from the 2% inflation rate per year of the UNI token, which is still roughly 250 million tokens per year. These tokens will mostly go to the community, thus reducing the percentage of UNI in the hands of the team and large whales. However, over the next two years, a significant percentage of inflation will be from the unlocking of time-locked tokens, so the concentration by large holders may go up before it falls again. As the cryptocurrency market continues to mature, the concentration of large holders will decrease over time as adoption continues.
Price Correlation With Bitcoin
According to intotheblock.com, the price correlation of Uniswap to Bitcoin is based on a 30-day metric of the “statistical correlation between the price of Bitcoin and a specific crypto-asset. A correlation close to 1 implies a strong positive correlation between the two prices, a correlation near 0 suggests no correlation and a correlation close to -1 points to a strong negative correlation.”
UNI’s price correlation with Bitcoin is high, which means Bitcoin’s price fluctuations have a strong impact on the price action of UNI. This factor suggests that Bitcoin still has tight dominance in much of the cryptocurrency market and UNI has farther to go before it decouples from Bitcoin’s dominance.
Holder’s Composition by Time Held
The majority of UNI holders have been holding Uniswap for over a year, with only less than 2% having held UNI for less than a month. The high proportion of over one-year holders indicates that many investors have a firm conviction in the long-term potential of Uniswap and refuse to sell. This is a great sign for UNI — the more HODLers the better.
Exchange Inflows and Outflows
Exchange outflows is one of the most useful Uniswap trading signals. It refers to the total amount of UNI transferred from exchanges to cold wallets or other alternative methods of custody. Outflows are typically a bullish indicator because supply is drying up on exchanges and investors are seeking to hold long term. Exchange inflows refer to the total amount of Uniswap tokens moved to exchanges. An increase in exchange inflows is normally a bearish sign because holders may be looking to sell their tokens on exchanges.
Interestingly, the number of exchange inflows versus outflows is relatively even. This factor could signal that investors and sellers are not as interested in trading, but most of this volume could be from the Uniswap platform’s use case and governance proposals.
Is Now a Good Time to Buy UNI?
Since reaching a record high of $44.97 in May 2021, the price of Uniswap has declined rapidly, which has led many investors to sell their holdings. According to coinmarketcap.com, UNI is down 86% from its highs, and this could be from the meltdown the cryptocurrency market experienced over the summer of 2022.
However, while many see a despairing and depressing market, others see a fantastic opportunity. Judging by these Uniswap trading signals, UNI seems like it may be poised for a significant rise in value. Periods of great fear in the markets frequently prove to be excellent opportunities to acquire an asset at a cheap price. If you think Ethereum’s ecosystem has long-term potential and trading of ERC-20 tokens will only continue to increase, then now can be a good time to start entering a position in the market.
How to Buy UNI?
Investors can buy UNI tokens from several different exchanges, including Binance.US, Crypto.com and Gemini. Some of these exchanges are not available to American citizens, so it is prudent to check and see first if you can use the platform.
get started
securely through Binance’s
website
Binance is the largest cryptocurrency exchange in the world by trading volume. In fact, it tops the ranks of cryptocurrency exchanges maintained by CoinMarketCap, which are ranked based on 24-hour trading volumes, exchange score and average liquidity. Binance triumphs over exchanges like Huobi Global and Coinbase, which follow closely in 2nd and 3rd places, respectively.
Previously based in Malta, the Binance Group is now based in the Cayman Islands. Binance has several locations and entities registered across the globe. In the United States, it’s known as Binance.US. The exchange in the U.S. uses the same cutting-edge technology and trading services as its global counterparts with the difference being U.S. regulatory compliance. It is operated by San Francisco-based BAM Trading Services.
Binance.US ranks 9th on CoinMarketCap’s list of the top 10 exchanges based on metrics like 24-hour trading volume, exchange score and average liquidity. Binance could be a good platform for you to invest in cryptocurrencies if you are a U.S.-based trader who trades frequently, doesn’t intend to pay high trading fees and needs access to a large number of cryptocurrencies.
Best For
- US Citizens
- Frequent day traders
- Users interested in Binance Smart Chain (BSC) and Binance Coin (BNB)
- Low trading fees
- Easy-to-use platform
- Wide selection of altcoins — it offers 51 cryptocurrencies apart from Bitcoin (BTC)
- Good customer service
- High liquidity because of large trading volumes
- Only residents of 43 states in the U.S. can trade on Binance.US. You cannot trade on this platform in New York, Connecticut, Hawaii, Texas, Vermont, Idaho and Louisiana
- Despite the wide selection of altcoins, the number of tokens offered on the U.S. platform is not comparable to the hundreds of choices available on the Binance global platform
- There is no option for telephonic customer support
get started
securely through crypto.com’s
website
Crypto.com strives to make cryptocurrency a part of everyday life by offering a full suite of services for crypto users. The company offers a Crypto.com App, Exchange, Visa Card, DeFi swap, DeFi Wallet, DeFi Earn, Crypto.com Price, staking, crypto lending, and many other services. What really sets them apart, however, is the combination of super low fees and incredibly generous rewards programs for their users.
Best For
- Traders who want access to a secure, low-cost cryptocurrency exchange
- Passive investors who want to earn interest on their balance without frequent trading
- Mobile investors who prefer to handle all their crypto needs via their phone or tablet
- Low fees
- High security
- One-stop shop for all your crypto needs (wallet, trading, spending, and more)
- Lots of ways to earn interest, rewards, and rebates
- Low privacy
- Customer service response time could be improved
Invest In Crypto
securely through Gemini Crypto’s
website
Gemini is a cryptocurrency exchange and custodian that offers investors access to over 100 coins and tokens. Founded in the US, Gemini is expanding globally, in particular into Europe and Asia. Offerings include both major cryptocurrency projects like Bitcoin and Ethereum, and smaller altcoins like Orchid and 0x.
Gemini is 1 of the only brokers with multiple platform options based on skill level. New investors will love the streamlined interface of Gemini’s mobile and web apps, while advanced investors might appreciate all the tools that come with ActiveTrader.
In addition to a host of platform choices, Gemini users also have access to insured hot wallets to store tokens without worrying about digital asset theft. Learn more about what Gemini can do for you in our review.
Best For
- New investors looking for a simple mobile and web app
- Day traders looking to use technical analysis tools
- Users looking for a 1-stop-shop to buy, sell and store all of their cryptos
- Easy and quick signups — can get started in as little as a 5 minutes
- Multitude of platforms to accommodate traders of all skill levels
- Hot wallets include insurance to protect your from theft and hacking attempts
- Charges both a commission and a convenience fee for users buying and selling through the desktop or mobile app
How Does UNI Fit Into the Bigger Picture?
As cryptocurrency is adopted by more people, the demand for exchanges to trade tokens on it should increase. If you believe Ethereum is here to stay, then you would feel confident that Uniswap and other DEXs like it, including Sushi and 1inch, will grow.
DEXs are a new idea and their goal is to create a world where anyone can transact on the blockchain without having to go through permissions granted by a centralized intermediary. Freedom and sovereignty of assets are important to many people, and it will be very interesting to see what the future holds for DEXs as a whole.
The post Uniswap UNI On-Chain Trading Signals by Alex Kiriakides appeared first on Benzinga. Visit Benzinga to get more great content like this.
