Uniswap (UNI) made headlines in the cryptocurrency market as it reached a 4-month high, only to face a significant pullback due to increased selling pressure and profit-taking. Despite impressive whale activity and a strong bullish push, the rally has slowed down as more UNI tokens are deposited to exchanges, signaling that large traders may be preparing to sell.

Whale Activity Drives UNI Surge

In the past 24 hours, Uniswap’s price has shown significant volatility, swinging between $8.83 and $9.63. This sharp price movement coincided with a surge in whale activity, with large transactions over $100,000 rising from 3.05 million UNI to 21.39 million UNI, a staggering increase of over 500%. Whales, who control 51% of UNI’s circulating supply, played a key role in driving the token’s price upwards. When whale transactions increase, it tends to drive greater volatility, as these large market participants have the power to influence price movements more significantly than smaller retail traders.

Profit-Taking and Increased Selling Pressure

Despite the strong rally, UNI’s momentum stalled when over 9 million UNI tokens were deposited to exchanges, according to CryptoQuant data. This suggests that profit-taking is occurring as traders prepare to sell their holdings. When tokens are moved to exchanges, it typically signals that the owners intend to liquidate their positions, which puts downward pressure on prices.

The selling activity has created a short-term resistance for UNI, stalling its price at the 4-month high of $9.63. While the price has retraced slightly, it still holds above key support levels, suggesting that the overall bullish trend is not entirely over—yet.

Indicators Show Potential for a 30% Rally

Currently trading at $8.93, UNI could see further gains if buying pressure resumes. Technical indicators are still showing some strength in the market. The Relative Strength Index (RSI) has reached 62, suggesting that the bullish momentum is still intact, although the market is approaching overbought territory. More importantly, the Moving Average Convergence Divergence (MACD) remains positive, signaling that the bulls still have control of the market.

For UNI to continue its upward trajectory, it will need to maintain strong buying support. If the buying volume increases, UNI could target the next resistance at $11.60, marked by the 1.618 Fibonacci extension level. This would represent a potential 30% rally from current levels.

The Risk of a Bearish Reversal

While the technical outlook for UNI remains optimistic, traders should remain cautious of a bearish reversal if new buying support does not materialize. The price has already shown signs of exhaustion after hitting its 4-month high. If the buying activity continues to dry up and sellers dominate, UNI could face a retracement.

Key support levels to watch include $7.34, where UNI has found support in the past. A drop below this level could signal the start of a downtrend, which may trigger further selling. Traders should be vigilant for signs of renewed selling pressure, especially as large traders look to lock in profits after the recent rally.

Derivative Market Dynamics: A Source of Volatility

In addition to the spot market, there has been a significant increase in activity on the derivative market. Data from Coinglass shows that over $2.8 million worth of short positions in UNI were liquidated in the past 48 hours. Forced liquidations, often triggered by rising prices, can contribute to increased buying activity as short sellers are forced to close their positions, creating a short-term upward pressure on the price.

If the bullish sentiment continues to build, additional short liquidations could add fuel to the fire, driving UNI higher in the short term. However, these dynamics can also lead to increased volatility, making it important for traders to monitor both spot and derivative markets closely.

What’s Next for Uniswap?

As Uniswap navigates this period of heightened volatility, there are several factors that will determine whether UNI can continue its rally or if the price will experience a deeper pullback.

1. More Buyer Support Needed: For UNI’s uptrend to persist, it will need continued buying pressure from both whales and retail investors. If more buyers enter the market, UNI could push past its recent high and target the $11.60 resistance level.
2. Profit-Taking Risks: The current selling pressure, indicated by the large number of UNI tokens being deposited to exchanges, could limit the rally. Traders should watch for signs of profit-taking or a shift in market sentiment that could lead to a bearish reversal.
3. Derivative Market Volatility: The increase in short liquidations and the activity on derivative exchanges will play a critical role in the immediate future of UNI’s price. If more forced liquidations occur, UNI could see a short-term spike. However, this volatility could also lead to sudden price swings, so caution is advised.
4. Overall Market Sentiment: The broader cryptocurrency market will also influence UNI’s trajectory. If the market maintains a bullish outlook, UNI is likely to benefit from a general rise in prices. Conversely, if market sentiment shifts to the downside, UNI could face stronger headwinds.

Conclusion: Watching for Key Support and Resistance Levels

Uniswap has shown impressive performance in recent weeks, reaching a 4-month high and experiencing significant volatility. However, profit-taking and increased whale activity have stalled its rally, and the next move for UNI will depend on continued buying pressure and whether large traders maintain their positions.

Traders should keep a close eye on key support levels at $7.34 and resistance at $11.60. Any movement in or around these levels could signal the next phase for UNI’s price action. In the meantime, short-term volatility is expected, making it important for traders to manage risk and stay informed about market developments.