UNI Price Drops Alongside TVL Decline: What’s Next?

Uniswap (UNI) price has witnessed strong buying momentum in November and the first week of December. The bullish trend was interrupted near the $19 territory

Uniswap (UNI) has experienced strong buying momentum in recent weeks, especially after hitting a low of $11.50 in mid-January. The bullish trend was halted near the $19 territory, leading to a price decline as sellers took over the trend.

Uniswap price continued to fall due to resistance from a descending trendline. However, the UNI price managed to hold a crucial support level of $12 since December as sellers attempted to drag the price down.

According to data from the crypto analytic platform DefiLlama, Uniswap's total value locked (TVL) on Polygon (MATIC) decreased by over 10% in the past 30 days, indicating a general drop in DeFi activity on the Polygon chain.

As of December 3, Uniswap's TVL stood at $108 Million, down 11.5% over the past 30 days. This decline also impacted other DeFi protocols on the Polygon chain, with Balancer and Aave also seeing a decrease in their TVL during this period.

Meanwhile, despite the setback, Uniswap remained a leading DeFi platform, with a total value of assets locked on Polygon amounting to around $844 Million.

UNI Price Drops as TVL Declines

According to the data aggregator, Uniswap's TVL also saw a decrease, dropping to just $3 Billion by December 3 from its peak of $4.91 Billion on November 8.

This decline in TVL coincided with a sharp decrease in value for Uniswap, with the UNI price dropping slightly over 30% in the past 30 days, moving from nearly $16 to its current trading price of $12.

According to charts from CoinMarketCap and TradingView, the coin showed weak performance in the market, with a price cascade defining the recent price action of UNI. However, there was a minor uptick from $11.50 to $12 by the end of January.

Several factors could be contributing to the price decline of UNI. For one, there has been a general decrease in engagement with DeFi, primarily driven by macroeconomic uncertainty and the apathy of online traders.

As a result, trading volumes have decreased. Competition from new DeFi products, especially newer Layer-2 solutions and other decentralized exchanges, has also impacted Uniswap's TVL and token price.

UNI Price Below Major Support: What's Next?

At the time of writing, the UNI price was trading at $11.94, up by 1.84% in the past 24 hours, while its market cap was at $7.16 Billion.

Based on the technical chart, the price experienced a bearish trend and declined below the major support level below the $12 mark. After losing this level, the Uniswap crypto showed a decrease of 14% in just two days but managed to recover these losses.

If the price recovers and crosses the $12 mark, it could indicate Whale involvement. Once the Uniswap crypto crosses the $12 level, sellers might panic, and buyers might gain confidence. If the price starts trading above the $15 mark, we can expect a good bullish rally.

On the other hand, if the UNI price remains below the $12 mark, it could be a bearish sign. If the price drops further to another support level of $10.80, sellers might take over. Also, a profit-booking scenario could arise.

This article is provided for informational purposes only and does not constitute financial, investment, or other advice. The author or any people mentioned in this article are not responsible for any financial loss that may occur from investing in or trading