March 25, 2023

Amid a disruptive bear market, Uniswap has managed to maintain healthy trading volumes over the past few months. A healthy result, but events during the bear market underscore its ability to become a bigger juggernaut in the DeFi space than it is now.

recent Grayscale report About the ongoing bear market helps make Uniswap’s potential a reality. It noted that Uniswap has a greater depth of major cryptocurrency pairs than top centralized cryptocurrency exchanges.

This includes Binance, which is currently the largest cryptocurrency cap by trading volume. That’s because its secret weapon is higher liquidity, which is how it outperforms its competitors.

The Trouble with Centralized Finance

The collapse of centralized financial platforms in the blockchain industry has greatly increased the selling pressure over the past few months.

Many investors have come to see CEFI staking and liquidity platforms as riskier. This result supports the flow of liquidity to DeFi platforms, which puts Uniswap in an advantageous position.

Liquidity in favor of the decentralized finance platform is expected to boost Uniswap’s UNI token performance in the next market cycle.

However, the same Grayscale report suggests that the bear market is likely to continue for at least another four to five months. This means that the price action of UNI is likely to remain subdued.

UNI is still up about 92% from its current 2022 lows, at $6.70 at press time. It could lose some of its gains in the short term, especially if the grayscale forecast for a bear market is accurate.

Source: TradingView

Support for UNI is currently held at the 0.382 Fibonacci retracement level.

Heading into the weekend, the short-term outlook remains unclear.

Bulls see a silver lining as network growth appears to be picking up after hitting a 4-week low on Aug. 23.

Source: Santiment

The long-term outlook for UNI remains favorable for bulls, especially given the liquidity flow and its leading position as one of the top DeFi platforms.

Its long-term performance to date has delivered healthy gains, as seen in the steady increase in the average coin age.

Source: Santiment

Unfortunately, the realised capitalisation measure, which fell to a 12-month low in July, was a different story. That’s because most buyers buy when the hype is near its peak, and the bear market leaves them in the red.

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