The price of decentralized exchange Uniswap’s governance token UNI has surged by 65% over the past week. Reaching a new all-time high of $14.25. At press time, UNI is trading at around $14.22, up 13.7% on the day.
Uniswap’s recent gains has pushed its market capitalization over the $4 billion mark. Market capitalization is an asset’s current price multiplied by its total supply. A metric that compares multiple coins with different supplies.
As a result of UNI’s ongoing price rally, it is now ranked second among the top DeFi tokens by market cap. Expanding the field to include all cryptocurrencies, the token is ranked 13th by market cap.
Fueling UNI’s price rally is an upturn in the number of new addresses. This is likely going to keep the uptrend intact.
The number of newly-created addresses on the network soared. Going from nearly 1,500 on January 22 to roughly 2,800 on January 24. This metric has grown consistently from 925 addresses per day on December 25.
Moreover, whales are still on a buying spree. The addresses holding between 1 million and 10 million UNI have surged from 56 to 62 in the last 30 days, representing a 9.6% increase.
The increase may seem insignificant, but the tailwind created behind Uniswap can only be comprehended by the large volume of tokens moved by the whales. Thus, if the buying action continues, UNI may even overshoot $15.
Will the Uniswap Uptrend Continue
On the flip side, the uptrend to $15 will fail to materialize if Uniswap fails to close the day above $13. Overhead pressure is likely to increase as sellers swing into action. Support is projected at $10, the 50 SMA and the 100 SMA on the 4-hour chart.
Since exploding last summer, the DeFi ecosystem has been one of the top-performing crypto markets. The only two sectors that are in the green in terms of their recent market capitalization growth are DeFi and decentralized exchanges.
They are up 17.6% and 23.2% over the last week, respectively. In comparison, the Currencies sector, including Bitcoin, is down 12%.
DeFi’s market cap recently exceeded $45 billion amid the ongoing price rally. With UNI and AAVE showing the best results among the top 10 DeFi tokens.
UNI is not extracting fees from its liquidity providers, unlike many other projects in the industry that are “obsessed” with dividends. While the potential to accrue value is important for tokens, earnings potential is not the same as dividends.
“Along this line of thinking, even if a token does implement some kind of fee capture it’s much better to reinvest those earnings rather than distribute as dividends,” Messari researcher Ryan Watkins tweeted. “UNI implicitly does this by not extracting fees from LPs (fee switch off).”