Uniswap (UNI) Price Falls 6% After Settlement With CFTC, Bullish Outlook Remains

Key Takeaways

• CFTC fined Uniswap Labs $175,000 for illegal leveraged trading.
• Uniswap’s UNI token dropped 6% but remained 12% higher in September.
• UNI may face further downside if resistance isn’t broken.

Earlier, the U.S. Commodity Futures Trading Commission (CFTC) has charged Uniswap Labs with illegally offering leveraged cryptocurrency trading to retail users without proper regulatory approvals. 

The price of the Uniswap (UNI) token fell by 6% from yesterday’s high of $6.60 to $6.20, where it is currently being traded. Despite the decline, UNI is still up by 12% from its recent low of $5.53 on Sep. 2 and maintains a bullish outlook. 

Uniswap Labs Pays $175,000

The decentralized exchange (DEX) allowed users to engage in leveraged and margined retail commodity transactions involving digital assets, which violated the Commodity Exchange Act (CEA). These transactions are only permitted on registered markets, which Uniswap was not.

Uniswap Labs has agreed to pay a $175,000 fine and cease further violations as part of the settlement. This enforcement action highlights the CFTC’s increasing focus on regulating decentralized finance (DeFi) platforms, particularly ensuring compliance with leveraged and margined trading laws. 

This case is part of a broader regulatory battle between the CFTC and the SEC over which agency should oversee various aspects of the crypto market. Both entities assert control over different segments of the industry.

Uniswap (UNI) Price Analysis 

After landing at $4.70 on Aug. 5, the price of UNI recovered 54% to a high of $7.22 on Aug. 21. This was an interaction with the descending resistance, which is why the price took a downturn. 

However, it maintained a higher low of $5.60 on Sep. 2, bouncing from the 0.618 Fibonacci level. This leaves two possibilities for UNI moving forward. The first is that from Aug. 5, we saw the beginning of the bullish phase. According to this scenario, UNI should now be eyeing a breakout above the descending resistance, which will confirm the assumption. 

However, as the wave structure behind the ascending move from Aug. 5 to 21 lacks decisiveness and doesn’t show a five-wave pattern, the rise from Sep. 2 could end as a lower high, leading to more downside. Today, the price made yet another interaction with the descending resistance, resulting in a rejection. 

If the decline continues, our first likely target would be $5, the same length as the previous decline from Aug. 22 to its recent low. However, going past this point could mean that UNI is facing significant seller pressure and will make a lower low of $4 before the decline ends.