Uniswap’s native token, UNI, has come under intense selling pressure recently, even as the protocol receives a boost from one of the most prominent names in crypto — Coinbase. Despite the seemingly positive development, a significant number of investors have responded by offloading their UNI holdings, signaling a lack of confidence in the asset’s near-term prospects.

The latest trigger for the market unrest was a series of large token transfers involving the Uniswap team. According to blockchain analytics platform SpotOnChain, an address linked to the Uniswap team moved 9 million UNI tokens — worth approximately $47.5 million — to Coinbase Prime. Over a span of six days, multiple such wallets cumulatively transferred around $61 million worth of UNI to the same platform.

Coinbase Prime is an institutional-grade trading platform that facilitates over-the-counter (OTC) transactions. These types of trades are typically used to avoid price slippage and minimize the market impact of large transactions. In theory, such activity should be interpreted as bullish, especially since it indicates that institutional interest in UNI might be growing. However, market participants did not receive this news as positively as expected.

Instead of interpreting the fund movement as a sign of growing institutional demand, traders and investors took it as a warning signal. The fear is that the Uniswap team may be preparing to sell part of its token holdings, which could flood the market and depress prices further. As a result, UNI has continued its recent downtrend, falling another 2.7% in the last 24 hours alone. The token has struggled to gain momentum throughout April, and the latest developments have only added to the bearish outlook.

Data from IntoTheBlock revealed that large holders are contributing heavily to the ongoing sell pressure. These big players, often referred to as “whales,” sold more than 515,000 UNI tokens, equivalent to about $2.74 million. With Netflow remaining positive, it’s clear that outflows from wallets onto exchanges have been increasing — another bearish signal for the token.

Spot market traders have echoed this sentiment. Over the last seven days, retail and small-scale traders liquidated nearly $15 million worth of UNI, one of the highest weekly sell-offs observed this year. This broad wave of exits has compounded the bearish pressure, driving UNI prices further downward and discouraging new entries.

However, not all metrics paint a bleak picture. Interestingly, Uniswap’s Total Value Locked (TVL) — a key indicator of user trust and activity in a DeFi protocol — has been on the rise. Since April 26th, the protocol has seen an inflow of $66 million, pushing its total TVL above the $4 billion mark. This suggests that, while traders may be bearish on the token’s price, users continue to engage actively with the Uniswap platform itself.

This divergence between token sentiment and protocol health raises an important question about investor psychology. It’s possible that market participants are overreacting to the fund transfers, overlooking the growing strength of the underlying Uniswap ecosystem. If the TVL trend continues and institutional activity via Coinbase Prime gains momentum, UNI could find support and begin a recovery in the coming weeks.

A look at the liquidation heat map adds more nuance to the outlook. The current price level places UNI at a critical point, with clusters of liquidation levels both above and below. This means that any sharp move in either direction could trigger a chain reaction of liquidations, potentially amplifying price movements. If UNI dips first and gathers momentum on the rebound, it might break through nearby resistance levels. Conversely, a premature rally could meet stiff resistance and be followed by a sharp correction.

In conclusion, while the Uniswap protocol itself appears to be on solid footing with rising TVL and institutional infrastructure like Coinbase Prime involved, the market’s short-term reaction has been overwhelmingly bearish. Token holders are interpreting the recent fund movements as a threat rather than an opportunity. Whether this fear proves justified or premature will depend on how Uniswap and broader market sentiment evolve over the coming weeks.