DeFi Crypto: Has Uniswap’s ‘buy the news’ hype fizzled out?
Due to its "Genie" announcement, Uniswap has spent the last day in the spotlight in the crypto world. The DeFi-based company plans to expand its product offering to include both NFTs and ERC-20 tokens after purchasing the aforementioned NFT marketplace aggregator. Users will therefore be able to immediately purchase and sell NFTs on Uniswap starting this fall.
Uniswap was able to increase its position in the rankings by almost 6% as a result of the aforementioned news, going from $4.9 to $5.2. However, it immediately erased its gains by falling virtually immediately. The token was worth $4.6 at the time of publication but continued to lose value until the early hours of Wednesday.
Why didn't the pump from Uniswap last longer?
As a result, a few requirements must be satisfied for pumps to last.
First, the macro-condition market should encourage the same. Top cryptocurrencies are currently losing value and have already ended their relief rally run. Due to its rather strong connection with the larger market, Uniswap isn't completely protected from its dumping.
Second, the basics ought to present a positive picture. The essential pillars of Uniswap are currently unstable. For instance, the total value locked on its platform has only been declining. Notably, it reached a peak of $10 billion in November but is now only at $4.7 billion. The same suggests that customers have been withdrawing money from the platform.
Third, market players should exhibit some degree of optimism. On the macro front, the OI has been decreasing, which shows that traders' interest in Uniswap has been waning. Even though UNI is not often a preferred token for trading, traders often hold onto it for a rally in order to make more money.
Additionally, it should be mentioned that over the previous day, the price of UNI has moved from the contango region to the backwardation. Typically, the market is considered to be in contango when futures prices are at a premium. Backwardation, on the other hand, is the state in which futures prices are discounted.
The current state of things demonstrates unequivocally that traders have begun to become negative and anticipate that the price of UNI will continue to decline.
Therefore, Uniswap won't be able to stage any successful rallies unless it ups its game on the aforementioned fronts. For the time being, it appears as though the "purchase the news" excitement is already history.