Uniswap Price Drops 5% as it Risks Breaking $3.22 Support

On April 23, Uniswap (UNI) faced downward pressure after dropping by around 5% on the daily chart, sparking fear in the DeFi community as the protocol faces a liquidity crisis after the Kelp DAO Hack.

According to CoinMarketCap, Uniswap (UNI) price is currently hovering around $94.16 with a marginal drop of 1%. At the time of writing, the cryptocurrency holds a market capitalization of around $1.43 billion, along with a daily trading volume of around $292.37 million. 

KelpDAO Hack Shakes the DeFi Sector and Damages Uniswap TVL

After the most bizarre hacking incident in the last week, where Kelp DAO was compromised in a cyber attack and lost around $293 million, the entire decentralized finance (DeFi) sector has witnessed a massive drop due to low on-chain activity. The KelpDAO is a well-known liquid staking protocol. 

Hackers found a loophole in the cross-chain bridge for rsETH, which allowed them to create new tokens without having any real backing for those tokens. This hack has sparked fear around the entire decentralized finance sector. In just 48 hours after the hack, more than $13 billion of Total Value Locked (TVL) was wiped out from the entire DeFi ecosystem, causing a drop in cryptocurrencies like AAVE.

After this cyberattack, DeFi users have started pulling out their money to keep it safe from any further attacks. Since Uniswap is the largest decentralized exchange, it also took a hit from this catastrophic situation.

On-chain data also shows that the Total Value Locked on Uniswap has gone down. According to DeFiLIama, the total volume locked in DeFi has dropped to $84.395 billion. In the last 24 hours, Uniswap experienced a 1.63% drop and currently revolves around $3.34 billion. Liquidity providers are withdrawing their assets to avoid any possible spread of damage from the KelpDAO situation. 

At present, the turnover rate is around 8%, which suggests that while people are moving their funds, they are doing it very frequently. However, Bitcoin is still showing resilience against this situation.

Uniswap Price Sinks to Major Support

According to the TradingView price chart, the UniswapUNI-4.57%price is currently showing a neutral to bearish trend on the daily chart. 

The relative strength index on the 14-day timeframes is currently revolving around 39, suggesting that the cryptocurrency is currently in neutral but slightly leaning into oversold territory. 

Apart from this, the current price of the Uniswap token is trading much below its long-term moving averages. The 200-day Simple Moving Average or SMA is around $5.01. When the current price stays so far below this historical average, it generally confirms that the market trend is heading in a negative direction. 

From a technical point of view, the token is now holding on to a very important support level at $3.22. This price is matching its recent local lows and also forming the lower edge of its short-term trading range. If this support breaks, the next major support zone sits further down at $3.00. 

On the flip side, Uniswap is expected to face strong immediate resistance at $3.40. This level has stopped many recovery attempts in the recent past. Above that, there is an even stronger structural resistance at $3.80.

In the last 30 days, the Uniswap price has dropped by around 8%. Even with the price going down, its ecosystem is still expanding as there are many structural changes happening. 

One of the major updates is the ongoing expansion of Uniswap V4 on the Linea network. Linea is a specialized layer designed to handle transactions more efficiently.

In addition, the protocol has recently turned on its fee switch mechanism, which allows the treasury to collect a part of the trading fees.

Also Read: AAVE Price Holds Key Support While Traders Build Leverage Positions