Uniswap (UNI) is seemingly in the end of its short-term correction and is trading inside a long-term support area.
Tokenterminal tweeted a chart of the cumulative volume for USDC pairs on Uniswap. While the volume was virtually zero in early 2020, it has been increasing sharply since May 2021.
However, recent reports have come to light that shows the total value locked (TVL) data is actually not accurate. The main reason for this is that TVL calculations do not account for swap fees. Each liquidity provider (LP) receives a 0.01 – 1% fee each time a trade is made, and it seems that TVL calculations do not account for this fee, which can be claimed by LPs at any time.
For example, while Uniswap reports the ETH/USDC pool TVL at $320 million, the correct value is just $175 million. Uniswap relies on the decentralized blockchain indexing service called The Graph. While its code is publicly available, it seems that the TVL calculations are amiss.
UNI breaks out
Despite this important matter that has not been handled, the price of UNI has broken out from a long-term descending resistance line, which had previously been in place since the May 2021 all-time high. The movement was also combined with a RSI breakout, increasing its legitimacy.
However, the price failed to sustain its increase and has nearly returned to its pre-breakout levels. Currently, UNI is trading inside the $5.30 horizontal support area, and the weekly RSI has failed to move above 50.
The closest resistance area is at $14.30.
The short-term chart suggests that a significant bounce is expected soon. The reason for this is that UNI Seems to have completed a five-wave downward movement (black) or is very close to doing so. There is strong support at $4.75, created by the 0.786 Fib retracement support level and a horizontal support area.
So, once UNI reaches this level, a considerable bounce would be expected. However, the direction of the long-term trend is still unclear. A weekly close below the $5.30 area would likely take the price towards a new all-time low, while a bullish weekly candlestick could be the catalyst for an increase towards $15.30.
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