Why is Uniswap (UNI) Price Going Up Today?

Uniswap decentralized exchange’s native asset, UNI, has emerged as one of the best performers among the top-ranking cryptocurrencies. As of Oct. 11, it was trading for as high as $8.21, up by around 15% in the last 24 hours.

Why is Unswap Price Rising A Lot?

The launch of Unichain, Uniswap’s own Layer-2 (L2) solution on Ethereum, is at the core of its latest rally.

What is Unichain — Uniswap’s Entry Into Ethereum L2 Space?

Unichain proposes improving transaction speed, lowering gas fees, and improving liquidity across decentralized finance (DeFi). It aims to do so by using the Optimism OP Stack, a layer-2 network, which will likely reduce block times to as low as 200-250 milliseconds, thus enhancing transaction speeds compared to Ethereum’s mainnet.

Introducing @unichain — a new L2 designed for DeFi ✨

Fast blocks (250ms), cross-chain interoperability, and a decentralized validator network

Built to be the home for liquidity across chains pic.twitter.com/lqfJh6Ltio

— Uniswap Labs 🦄 (@Uniswap) October 10, 2024

This new L2 network aims to boost cross-chain interoperability, enabling seamless swaps across blockchains without moving liquidity away from Ethereum. The launch has also been framed as a step forward in mitigating issues like Maximal Extractable Value (MEV), which can distort market efficiency by allowing bots to exploit delayed transactions.

Crypto traders anticipate that Unichain will drive user adoption for Uniswap, which, in turn, could further increase demand for UNI tokens.

Uniswap Open Interest Rises to June Highs

Today, Uniswap’s price rise coincides with a sharp rise in its open interest and funding rates in the futures market.

Notably, the number of unsettled UNI Futures contracts rose from $87.76 million to $139.58 million following the Unichain launch on Oct. 10. Meanwhile, its funding rates surged from -0.315% to 0.174% in the same timeframe.

Typically, a rise in open interest, especially after a significant event like the Unichain launch, indicates that more traders are entering positions. That implies a bullish outlook, as many expect the token’s value to rise due to Unichain’s potential benefits.​

Similarly, the shift from negative to positive rates shows a sharp increase in traders opening long positions, betting on UNI’s price to continue rising.

Uniswap Technical Analysis

Uniswap Four-Hour Chart — Overbought Correction Underway

UNI’s price was undergoing an overbought correction as of Oct. 11, after its four-hour relative strength index (RSI) crossed above the 70 mark. Traders view the RSI reading’s rise above 70 as a sign of an overheated market, which typically follows a period of correction or consolidation.

UNI’s ongoing correction has stalled near its interim support of around $8, coinciding with its 0.236 Fibonacci retracement level. Floating above this level could cause the Uniswap token to pursue a rebound toward the 0.0 Fib level of around $8.50 by October, aligning with the upper trendline of its prevailing rising wedge pattern.

Conversely, a break below the $8 support level could mean a decline toward the wedge’s lower trendline and the 0.382 Fib level — both aligned with the circa $7.65 mark — by October’s end.

Uniswap Daily Chart — Ascending Channel Hints At 17-20% Correction

On the daily chart, things are equally bearish for UNI.

One the one hand, its daily RSI has crossed into the overbought zone above 70. And, on the other hand, its price is testing the upper trendline of its prevailing ascending channel pattern, which has lately resulted in sharp bearish rejections.

A retreat from the channel’s upper trendline could mean a sharp decline toward the lower trendline, if history is any indication. The downside target aligns with the 0.236 Fib line and the 50-day EMA (red) of around $7.