Uniswap (UNI) is facing a crucial moment as significant whale movements, network indicators, and price action are raising questions about its next move. Recently, Galaxy Digital, a major institutional player, deposited a hefty 600,000 UNI tokens, worth approximately $4.37 million, to exchanges Binance and OKX. This deposit is part of a larger strategy involving 5.26 million UNI tokens valued at $40.6 million deposited over the past week. Such large transactions often raise market eyebrows, with traders speculating whether this whale activity is signaling an upcoming rally or simply setting the stage for a deeper market correction.

Despite the whale movements, UNI’s price has been under pressure recently. The cryptocurrency is testing a critical demand zone around the $7.50 mark, which will determine its short-term trajectory. As of the latest data, UNI is trading at $7.52, showing a modest 1.4% increase over the past 24 hours. However, with the Relative Strength Index (RSI) sitting at 37.63, there’s room for a potential rebound if the support at this demand zone holds. Should UNI break below this zone, it could signal further weakness and a potential continuation of the downtrend.

An important aspect of UNI’s market behavior is the concentration of holders “in the money” versus “out of the money.” Currently, 19.49% of Uniswap holders are in profit, representing 194.9 million UNI tokens, while a much larger 74.35% of holders are at a loss. This high concentration of underwater positions could impact price action. If UNI experiences a price increase, many holders could break even, potentially triggering selling pressure, which could limit the extent of any rally.

Adding complexity to the situation is the network growth and transaction count, which have significantly declined. The most recent data shows that only 10 new addresses joined the Uniswap network, and the transaction count remains relatively low at 1,053. These declines suggest that market interest in Uniswap is waning, which could dampen the likelihood of a price surge in the short term.

Despite these concerns, UNI has experienced a spike in short liquidations. Over the past few days, $48.03K worth of short positions were liquidated on Binance, compared to only $10.1K in long liquidations. This indicates the potential for a short squeeze, which could add upward pressure to UNI’s price as traders who bet against the asset are forced to cover their positions. The absence of significant long liquidations further suggests minimal selling pressure, which could support a price recovery if the short squeeze continues.

While the combination of whale activity and a potential short squeeze could push UNI higher, the broader market indicators and declining network activity suggest that a deeper decline may be more likely unless UNI can break through key resistance levels and maintain support above the $7.50 range. Traders and investors should closely monitor the upcoming price action to determine if the short-term support holds or if a breakdown below the demand zone triggers further selling.

In conclusion, while the whale movements and short liquidations offer some hope for a potential price surge, the overall market environment and on-chain data suggest that a deeper correction remains a strong possibility for Uniswap unless key support levels can be maintained.