Uniswap (UNI) Price Faces Sell-off Risk as Full Supply Unlocks
UNI tokens get unlocked but the supply held by key players is still unsold. Is there an incoming sellers pressure after v4 launch?
Key Takeaways
- UNI tokens are fully unlocked, but holders have mostly left them unsold.
- The actual circulating supply is 25.83% of the total UNI.
- UNI price faces resistance, with potential upside or drop.
Upon its launch In September 2020, Uniswap’s UNI token was issued and listed, with 83% of the total supply (830 million tokens) allocated to the team, investors, advisors, and the community treasury.
These tokens were subject to a four-year unlocking schedule. The four-year period has passed, and the tokens have been fully unlocked, making UNI a fully circulating token. In addition, Uniswap Labs has scheduled Uniswap v4 for a tentative Q3 2024 launch, following the Dencun Mainnet launch in March.
Will these catalysts negatively impact the price of UNI as the increasing supply hits the market, combined with no anticipated major developments after the v4 launch?
UNI Tokenimics
Let’s examine how much of this 83% has entered the market and the current actual circulation of UNI.
The distribution of UNI tokens includes 2% for LP staking rewards, 15% for an airdrop to early users, 43% for the community treasury, and 40% for the team, investors, and advisors, all subject to a four-year unlocking cycle. The team allocated 17% to LP mining and airdrops and fully circulated it at launch, so the focus is on the community treasury and team allocations.
The community treasury has now been fully unlocked with 430 million UNI, but only 30.2 million UNI have entered the market, with 399.8 million still held. The team, investors, and advisors, who also had 400 million UNI unlocked, have sold just 58.2 million, with major holders like a16z retaining most of their tokens.
Although UNI is fully unlocked, most holders have not sold their tokens. The actual circulating supply is approximately 258.3 million UNI or 25.83% of the total one billion supply.
UNI Price Analysis
After hitting a yearly low of $4.70 on Aug. 5, UNI saw a 54% rebound, reaching $7.22 by Aug. 21. Consequently, this peak coincided with descending resistance, causing the price to reverse.
By Sept. 2, UNI held a higher low at $5.60, bouncing from the 0.618 Fibonacci retracement level. From here, two potential scenarios emerge. Firstly, the bullish phase began on Aug. 5, with UNI possibly targeting a breakout above the horizontal resistance at $7.20, confirming the bullish outlook.
However, the upward movement from Aug. 5 to Aug. 21 lacked a decisive five-wave pattern. This raised the possibility that the recent rise could result in a lower high, leading to further declines. UNI recently broke above the descending resistance. This is a positive sign, but there is still a chance it was a corrective increase.
If the increase continues for one more high, we will receive confirmation that UNI is starting a bull phase, as a five-wave pattern will develop. On the other hand, if it makes an immediate downturn, we anticipate a drop to the $5.50 to $5.20 area for its first target.
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