The UNI price held steady at $6 on Sunday as investors reacted to the latest token burn after the recent token burn. Uniswap’s token was up by 25% from its lowest point this year. This article explores what to expect with the UNI token in the coming days.
Uniswap burns 100 million tokens
One of the top crypto news stories during the weekend was that the Uniswap team incinerated 100 million UNI tokens worth over $591 million.
The token burn was because of the recent Unification vote by the Uniswap community that introduced more features to boost its tokenomics. This vote passed overwhelmingly, with 125.3 million UNI tokens voting in favor against 742 who opposed it.
The UNIfication proposal sought to do a few things. First, and most important, it unified the fees made hy the Uniswap exchange and Unichain, its layer-2 network. These fees will now be burned, improving its tokenomics by making it deflationary.
Second, the proposal suggested that Uniswap should burn 100 million tokens that were in its treasury. These tokens came from the network fees it collected in the past few years as it handled over $1 trillion in trade volumes.
Third, the proposal called for the activation of the protocol fee switch for Uniswap v2 and select v3 pools. These fees will route automatically and burn UNI tokens.
Uniswap is facing headwinds
The proposal came at a time when Uniswap is facing major headwinds as the crypto market crash continues. One of the top challenges is that the volume in its platform is falling as many investors stay away from the market.
Data compiled by DeFi Llama shows that the network handled $53 billion in December, much lower than the $80 billion it handled in November this year.
Uniswap’s DEX volume has been in a strong downtrend after it peaked at $123 billion in October this year. As a result, its fees has also been falling in the past few months, moving from a high of $132 million in October to $43 million this month.
Uniswap’s challenges are mostly because many crypto investors have opted to stay away as prices have dropped. Also, there are competition concerns as companies like PancakeSwap and Raydium have gained market share.
Most of the competition is coming from perpetual DEX companies like Aster, Lighter, and Hyperliquid that are handling billions of dollars worth of tokens a month.
UNI price technical analysis
The daily chart shows that the UNI price has rebounded in the past few days, moving from a low of $4.85 earlier this month to the current $6.
UNI token formed a double-bottom pattern, one of the most common bullish reversal signs in technical analysis. It is now attempting to move above the 50-day Exponential Moving Average (EMA).
Therefore, the most likely UNI price prediction is bullish, with the next key target to watch being the psychological point at $10, which is ~70% above the current level. This price aligns with the neckline of the double-bottom pattern.
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