UNI Price Approaches $10 – Uniswap Responds to SEC Wells Notice
Uniswap Responds to SEC - UNI Price Approaches $10 | Credit: Getty Images
- The United StatesSecurities and Exchange Commission (SEC) issued a Wells notice for Uniswap on April 10.
- Uniswap’s team issued their response on May 22, during an ongoing price rally.
- Is the UNI trend still bullish, or did the fall resulting from the notice turn it bearish?
On April 10. the SEC issued a wells notice for Uniswap, causing the price to fall sharply below $10. The decrease led to a low of $5.89 three days later. However, the price has increased since. On May 22, Uniswap responded to the Wells notice.
In its response , the team stated that Uniswap is a low-cost transparent infrastructure that protects investors, urging the SEC to embrace this technology. On top of this, it asserted the SEC’s legal arguments are weak and affirmed the team will defend itself in court.
Will this begin a bullish trend reversal for UNI, or is the increase just a temporary relief rally?
UNI Retests Long-Term Support
The UNI price has fallen since its yearly high of $17.05 in March. The decrease accelerated the week of the Wells Notice, leading to a low of $5.89.
However, the fall did not cause a breakdown from the $7.20 support area nor the previous descending resistance trend line. Rather, the price action suggests it was a regular retest after a breakout. This is supported by the ongoing upward movement.
A closer look at the movement shows the main resistance is at $10.20. This is both a horizontal and Fibonacci resistance area. While UNI has broken out from its descending resistance trend line, whether it breaks out from this area or not can determine the future trend’s direction.
The MACD and RSI support the possibility of a breakout. The indicators are both trending upward, the MACD is positive, and the RSI is above 50. The previous time the indicators were at these levels was before the April fall triggered by the Wells Notice. As a result, the readings suggest the trend has now turned bullish.
Conversely, failure to break out can lead to a retest of the long-term support at $7.20.
What is a Wells Notice?
A Wells notice is a formal notification issued by the SEC, indicating its intent to recommend action against a company or individual for securities law violations. It gives recipients the opportunity to provide a written defense, known as a Wells submission before any final decisions are made regarding legal action.
The SEC has issued similar warnings in the past, most famously in an ongoing legal battle against Ripple Labs and a more recent one against Binance. Furthermore, the SEC has investigated Uniswap labs since 2021, causing the platform to delist several tokens.
Uniswap defended itself against the legal action, but the UNI price decreased sharply after the announcement was made public. Uniswap’s defense has been that it only administers the front-end interface rather than the Uniswap protocol, which is an autonomous code for public use
Uniswap’s Response
In a lengthy X post , Uniswap’s founder Hayden Adams said that rather than being surprised by the Wells notice, he is “annoyed, disappointed and ready to fight”. Adams stated that SEC is focusing on good actors such as Coinbase and Uniswap while letting bad ones such as FTX slip through their fingers.
He noted that he will continue building in the U.S. and fighting all the way to the Supreme Court if needed, in a battle that can shape the future of financial technology.
The Uniswap team assured users that their products will continue to be available. Also, they will continue to build new products. It noted that Uniswap is a good actor that protects its users, emphasizing its $2 trillion volume without a hack.
Finally, the team emphasized that Uniswap is not a security, and warned that if the SEC continues attacking new and transparent technologies, the U.S. will fall behind on innovation.
UNI Price Prediction: What’s the Trend’s Direction?
The UNI price fell nearly 15% after the Well notice became public. It dropped from a high of $11.30 to the current price of $9.40. Despite the drop, the weekly time frame does not show a change in trend.
The decrease is part of a correction that has been ongoing since March (red icon). At the time, the $15 horizontal resistance area rejected the price. Currently, UNI trades inside the long-term support area at $9.
The reaction to the area is critical because of both the RSI readings and the price action. The RSI is currently at 50, an important level in determining whether the trend is bullish or bearish. So, a UNI price bounce can also trigger an RSI bounce, while a breakdown can cause the same.
As a result, the reaction to the $9 area will be key in determining the future trend’s direction. A successful bounce can lead to a 60% increase and retest of the $15 area.
On the other hand, a breakdown can cause a 30% drop to the previous descending resistance trend line at $6.50.
Wells Notice Concerning but Trend Remains Intact
While the SEC’s actions are concerning for the future trend, the price action does not yet show a trend break. Rather, the long-term bullish trend remains intact as long as UNI does not break down below $9. Moreover, while the Wells notice caused a short-term drop, the legal battle is likely to continue for a long period of time before a resolution is reached.
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