Uniswap (UNI) Price Prediction: UNI Could End 2022 in $3.30-$8.0 Range

Joel Frank
Published: Jul 13, 2022, 15:19 GMT+00:00

After a torrid start to 2022, Uniswap’s medium-term technical outlook has turned more neutral since June.


Key Points

  • After a torrid start to 2022, Uniswap’s medium-term technical outlook has turned more neutral since June.
  • UNI could end 2022 within a $3.30-$8.0ish range.
  • With Uniswap the dominant DEX, UNI seems a prime candidate to recover when the current crypto winter ends.

Uniswap’s Mixed Outlook for H2 2022

The first half of 2022 was unequivocally ugly for Uniswap. At current levels just above $5.50, the Decentralised Exchange’s utility and governance token UNI is down about 70% on the year. Versus its record high from May 2021 around $45, UNI is down about 87%.

For most of 2021, UNI/USD was locked within a downs trend channel that dragged it lower from around $20 to earlier yearly lows in the $3.30 area. But in the second half of June, UNI/USD broke to the north of this downtrend. It also managed to break to the north of a $3.30-$6.0ish range that it had been stuck in since mid-May. It also managed to break back above its 21 and 50-Day Moving Averages convincingly for the first time since April.

UNI/USD breaks out of H1 2022 downtrend. Source: FX Empire

That suggests that, at the start of H2 2022, UNI’s medium-term technical outlook has turned more neutral, rather than negative before. While a further deterioration in cryptocurrency market sentiment that could send UNI back to the low-$3.0s is possible, especially in light of the latest US inflation data encouraging markets to bet that the Fed might raise rates by 100 bps later this month, a recovery in sentiment that takes UNI back to the key $8.0 resistance area is also possible.

Against the current uncertain economic backdrop, the bearish scenario is probably more likely to play out. But if inflation does start to ease as major economies enter recession later this year, and central bank tightening bets are thus paired back as a result, then there is room for a recovery later in the year. A $3.30 to $8.0 range in the coming months seems likely. But if UNI was to swiftly drop under $3.30 support, a test of November 2020 lows just below $2.0 would be on the cards.

Uniswap Set to Dominate Post-Winter Crypto Market

The ongoing so-called crypto winter has had a devastating impact on Decentralised Finance. Total Value Locked (TVL) across the space has collapsed to around $65 billion as of Wednesday versus levels above $220 billion as recently as last December, according to DeFi Llame.

The chilling impact of the decline in major crypto prices coupled with the collapse of Terra’s UST algorithmic stablecoin back in May has seen TVL on Uniswap’s platform drop to around $4.7 billion as of 13 July. Last November, it briefly surpassed $10 billion.

But according to DeFi Llama, Uniswap is still the second largest Decentralised Exchange by TVL behind Curve Finance. Indeed, by many other metrics, Uniswap is the dominant player in the Decentralised Exchange (DEX) space.

For example, Uniswap is the largest DEX when it comes to trading volumes by a significant margin. According to CoinGecko, Uniswap saw trades worth over $900 million in the last 24 hours, compared to PankcakeSwap’s $145 million and Curve’s $94 million.

Meanwhile, when it comes to the daily fees that it earns from users of its platform, Uniswap is currently competing with Ethereum for the top spot out of all projects in the crypto space. On 12 July, Uniswap earned just over $3 million in fees versus Ethereum’s under $2.9 million.

Even though Uniswap’s UNI token has been taking a battering, daily fees are up nearly $1.3 million versus this time last year. This time two years ago, Uniswap only raised just over $70,000 in one day.

Its strong fundamentals suggest that Uniswap has every likelihood of being a dominant player in the DEX space when macroeconomic conditions eventually improve, facilitating a broad risk asset/crypto rebound. That should mean that its utility/governance token UNI does well.

Some even think that within the next decade or so, some DEXs may be able to overtake centralized crypto exchanges such as Binance and Coinbase. Back in May, Uniswap’s developer Uniswap Labs released a paper claiming that the platform could provide more liquidity than its larger centralized rivals, thus saving them on trading fees. According to the paper, for the ETH/USD pair, traders could save $24,000 on a $5 million trade.

Also back in May, Uniswap surpassed $1 trillion in all-time trading volume, according to an announcement by Uniswap Labs on Twitter. The company has “onboarded millions of users to the world of DeFi”, “introduced fiar and permissionless trading” and “lowered the barrier to liquidity provision”, it said.

The DEX has achieved $1 trillion in transacted volume despite a relatively small userbase of just 3.9 million wallets according to data from Uniswap Labs as of May. Analysts say that highlights the fact that the DEX has plenty of room left to grow.

If Uniswap is to dominate the DEX landscape for the coming decade, then UNI has every possibility of surging back towards record levels in the years ahead. But first, an improvement in global macro conditions (lower inflation, less hawkish central banks and stronger growth) is going to be needed and who knows how long that will take.

About the Author

Joel Frank is an economics graduate from the University of Birmingham and has worked as a full-time financial market analyst since 2018. Joel specialises in the coverage of FX, equity, bond, commodity and crypto markets from both a fundamental and technical perspective.

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