Uniswap (UNI) Price Forecast: SEC Wells Notice Spooks Long-term Holders into $18m Sell-Off

Ibrahim Ajibade
Updated: Apr 12, 2024, 08:02 GMT+00:00

Key Points:

  • Uniswap (UNI) price slid to a 50-day low of $8.9 on April 12, wiping over $1.3 billion from its market capitalization within the last 72-hours.
  • The 20% UNI price decline comes on the back of the US SEC serving a Wells Notice on Uniswap on April 9.
  • Long-term holders rapidly traded 1.7 million UNI on April 10, in response to the SEC's crackdown.
  • On-chain data shows more UNI sell-orders piling up across different exchanges.
Uniswap (UNI) Price Forecast

In this article:

Uniswap (UNI) price slid to a 50-day low of $9 on April 12, shedding over $1.3 billion in market capitalization since the SEC’s Wells Notice. On-chain data analysis explores the key bearish catalysts that could impact the UNI price trend in the coming days.

As the selling pressure mounts, where will UNI price find support?

Wells Notice Spooks UniSwap Long-term Investors into $10m sell-off

Uniswap is a prominent decentralized exchange platform that enables automated token swaps on the Ethereum (ETH) blockchain.

On April 10, 2024, the U.S. Securities and Exchange Commission (SEC) issued a Wells notice to Uniswap, as the team confirmed on social media.

A Wells Notice is a formal notification issued by the SEC to inform a company or individual that the regulator’s staff intends to recommend enforcement action against them. This notice gives the recipient an opportunity to provide a written explanation or argument (a “Wells submission”) as to why such action should not be taken.

The Uniswap team kicked against the development, vowing to file a robust defence.

“Today’s Wells notice against Uniswap is disappointing, but is not unexpected from this SEC,”

Marvin Ammori, Uniswap Chief Legal Officer, April 10, 2024 via X (formerly Twitter).

Despite the positive outlook presented by the Uniswap team, the SEC’s Well Notice has put a number of UNI long-term investors on high-alert.

Sanitment’s Dormant Circulation chart below tracks the number of recently-traded UNI tokens had been previously held unmoved for the last 180-days.

Uniswap (UNI) Dormant Circulation vs Price | April 11, 2024 | Source: TradingView
Uniswap (UNI) Dormant Circulation vs Price | April 11, 2024 | Source: TradingView

As seen above long-term holders (180-d) traded over 2 million UNI tokens between April 9 and April 11. Valued at the current prices of $9 per token,  Long-term holders rapidly offloaded $18 million UNI since April 10, in response to the SEC’s Well Notice.

Evidently, the long-term holders are increasingly selling off their UNI tokens in the aftermath of the US SEC serving a Wells Notice on Uniswap on April 9 has contributed to the 20% decline in UNI prices.

When long-term investors start offloading their tokens during a price downtrend, it trigger more bearish market reaction.

  • Negative sentiment: First, it signals that majority of Uniswap stakeholders are concerned about the recent development, and imminent regulatory crackdown.
  • Supply Surge: the long-term holders’ $18 million UNI sell-off further dilutes the short-term market supply, while also discouraging prospective new entrants.

These factors will likely combine to put more downward pressure on UNI prices in the days head, especially if the Legal teams’ official response to the Wells notices fails to forestall the SEC’s impending charges against Uniswap.

UNI Price Forecast: $9 support at risk amid mounting Sell-orders

Uniswap’s long-term investors rapidly selling off $18 million in response to the SEC’s Wells Notice puts UNI price at risk of tumbling below $8 for the first time in 60-days.

While the bulls are currently set-up to defend the $9 support level, on-chain data shows that traders are piling up more sell-orders which will likely trigger further downside.

IntoTheBlock’s aggregate exchange market depth chart tracks the number of active buy/sell orders currently listed for an asset across 15 prominent crypto exchanges.

The latest data as of April 12 shows that UNI sell-orders have now exceeded the current active market demand.

Uniswap (UNI) Price Forecast | Source: IntoTheBlock
Uniswap (UNI) Price Forecast | Source: IntoTheBlock

As seen above, the bears have listed active orders to sell-off 6.4 million UNI tokens around the current prices. Meanwhile, the total active buy-orders currently stands at 5.01 million, resulting in an excess market supply of over 1.3 million UNI.

Going by the cardinal law of demand, excess supply of an asset relative to demand often results in lower prices. If long-term holders offload more tokens and traders begin compete to get their UNI sell-orders filled quicker, prices will likely tumble towards $8 mark in the days ahead, as predicted.

But if thing take a quick positive turn, bulls must clear the psychological resistance at $10 to regain foothold in the Uniswap markets.


About the Author

Ibrahim Ajibade Ademolawa is a seasoned research analyst with a background in Commercial Banking and Web3 startups, specializing in DeFi and TradFi analysis. He holds a B.A. in Economics and is pursuing an MSc in Blockchain.

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