A platform like a traditional exchange
Uniswap is a software built on Ethereum designed to incentivize a decentralized global network for automated liquidity provision. It eliminates the need for intermediaries or custodians to facilitate trading and uses several crypto assets, including its native UNI cryptocurrency, to offer a service comparable to traditional exchanges.
This successful project, launched in 2018 by founder Hayden Adams, aims to facilitate the buying and selling of crypto assets in a manner similar to traditional exchanges. Uniswap employs a decentralized pricing mechanism that enables users to swap ERC tokens without relying on an order book. Unlike conventional exchanges that have a central order book for buyers and sellers to place orders, Uniswap uses liquidity pools.
Each pool on Uniswap contains two tokens, which together form a trading pair. For instance, the DAI/ETH liquidity pool on Uniswap contains equal values of DAI and ETH. Liquidity providers are rewarded with a share of trading fees and newly minted UNI cryptocurrency for maintaining liquidity.
“Deposits in these pools are vital to Uniswap’s operations, as they allow users to buy and sell cryptocurrencies by swapping one token for another. Anyone can list a token on Uniswap if a liquidity pool is available for that token. However, Uniswap operates on Ethereum, so it does not support tokens from other blockchains.”
– Uniswap Team
Uniswap’s UNI cryptocurrency plays a central role in its network, and holders of UNI can vote on proposals to help drive the development of Uniswap and improve its ecosystem. UNI might attract investors looking for exposure to a wide range of projects on the Ethereum blockchain, but the platform’s success depends on how it fares against its competitors.
The beginning of 2023 was very promising for UNI; however, the trend has shifted in the past two weeks. Uniswap (UNI) has fallen over 15% since February 19, and the risk of further decline persists.
Silvergate Capital reveals operational challenges
The cryptocurrency market is facing pressure following Silvergate Capital’s announcement that it is encountering operational challenges. Silvergate Capital provides financial infrastructure services to some of the largest cryptocurrency exchanges, institutional investors, and mining firms.
The warning from Silvergate Capital sparked concerns about a possible domino effect, and soon after, major exchanges like Bitstamp, Coinbase, and Crypto.com announced they were severing ties with Silvergate Capital.
Craig Erlam, a senior market analyst at OANDA, stated that the Silvergate news introduces additional risks to the industry, and traders should be aware that crypto sell-offs could accelerate if Bitcoin pada ispod 20,000 dolara opet.
Investors are advised to maintain a defensive investment strategy in the coming weeks, especially in light of strong economic data this week which suggests that the Federal Reserve may continue its tightening policies, potentially dampening sentiment in the cryptocurrency market.
“The concern is that, not only has the survey shown a downturn in economic activity, but the rate of input cost inflation has increased, which could prompt even more aggressive tightening from the Federal Reserve despite rising recession risks.”
– Chris Williamson, Chief Business Economist, S&P Global Market Intelligence
Technical analysis for Uniswap (UNI)
Uniswap has declined from $7.62 to $6.01 since February 19, 2023, and the current price stands at $6.28. UNI may struggle to maintain support above the $6 level in the coming days, and if it breaks below this threshold, it could potentially fall to $5.
Key support & resistance levels for Uniswap (UNI)
The chart (from May 2022 onwards) highlights critical support and resistance levels that can help traders predict potential price movements. Uniswap (UNI) has weakened from its recent peaks, but if the price breaks above the $8 resistance, the next target could be $9.
The current support level is $6, and a break below this level would trigger a “SELL” signal, possibly leading to a drop to $5.5. If the price falls beneath $5, a significant psychological support level, the next target could be around $4 or even lower.
Factors favoring a rise in Uniswap (UNI) price
While the upside potential for Uniswap (UNI) remains limited for March 2023, if the price breaks above the $8 resistance, it could target $9 next.
Additionally, any news suggesting the Fed may be less hawkish could be viewed as positive for cryptocurrencies. UNI might see price gains if the Federal Reserve signals a slower pace of rate hikes.
Indicators pointing to further decline for Uniswap (UNI)
Uniswap (UNI) has dropped over 15% since February 19, 2023, and market participants should be prepared for the possibility of further downward movement. Silvergate Capital’s operational issues have led some of its major clients to seek alternative solutions or reduce their exposure by selling positions.
As a result, sentiment in the cryptocurrency market has turned negative again, and if the Federal Reserve raises interest rates beyond initial expectations, it could place additional pressure on prices in the coming weeks. UNI’s price movements are also linked to Bitcoin’s performance, so if Bitcoin falls below $20,000 again, UNI could experience even further declines.
Uvidi analitičara i stručnjaka
The fundamentals of Uniswap (UNI) are closely tied to the overall cryptocurrency market, which remains under pressure following Silvergate Capital’s announcement of operational challenges.
Analysts also caution that the US central bank could hike interest rates by 50 basis points this month, which would negatively impact both stock and cryptocurrency prices. The Federal Reserve is set to meet on March 21, and Quincy Krosby, Chief Global Strategist at LPL Financial, stated that if inflation continues to rise, a 50 basis point increase could be on the table.
Izjava o odricanju od odgovornosti: Cryptocurrency is highly volatile and not suitable for all investors. Never invest money that you cannot afford to lose. The information presented on this site is for educational purposes only and should not be considered as financial or investment advice.
