On January 27, Bitwise Asset Management filed a Delaware Statutory Trust for the Bitwise Uniswap ETF. This marks a step often taken ahead of a spot ETF application with the U.S. Securities and Exchange Commission (SEC). The filing does not indicate regulatory approval, but it signals preparatory groundwork by the asset manager.

 Source: Delaware 

This allows them to prepare the necessary paperwork. Hence, they can file a formal application for an ETF once there is greater clarity from regulators regarding crypto-based financial instruments.

The filing coincided with extremely negative sentiment around Uniswap’s UNI token, according to Santiment data, a condition that historically appears near short-term price stabilization phases rather than long-term trend breakdowns.

Technicals Signal Seller Exhaustion

From a technical standpoint, the 4-hour UNI/USDT chart shows that the 50 EMA (Exponential Moving Average) is currently above the price. This indicates that the current trend is downward and that the correction is ongoing.

Although the price action indicates a downward trend, some of the momentum indicators are showing that the price has less downward momentum than previously. Specifically, the RSI (Relative Strength Index) has moved upward from its recent low. It is approaching the middle area of the index.

Historically, it indicates that the selling momentum of the token is beginning to fade. Additionally, the volume associated with the downward price movement has decreased.

This indicates that retail sellers are becoming exhausted and are likely to be unable to continue driving down the price of the asset. 

Source: TradingView

Also Read | Uniswap Whales Accumulate 12.4 Million UNI as Price Holds Near $5

Underlying Network Activity Remains Robust

Despite the downward trend in price, Uniswap’s underlying network activity continues to remain robust. According to Token Terminal, Uniswap has seen continued usage of its protocol.

Over the last year, the Uniswap protocol has facilitated approximately $1 trillion in cumulative trading volume. This continued usage of the protocol has occurred while the rest of the market has been experiencing downward price movements.

Due to the continued use of the protocol and the resulting increase in interest in the asset, institutional investors have taken notice of the potential of Uniswap. They have also taken notice of other DeFi protocols as potential investments through regulated investment vehicles.

Market Outlook

If UNI is able to break back above the 50 EMA, it would add further credence to the idea of a short-term relief rally. On the other hand, failure to maintain support above recent lows would eliminate the possibility of a short-term relief rally.

Furthermore, the filing is consistent with a larger institutional trend. As volatility within the markets continues to increase, asset managers are continuing to establish infrastructure to provide exposure to various cryptocurrencies.

Also Read | Uniswap Burns 100 Million UNI Tokens Following Historic Governance Vote