According to Glassnode data, the change in the netflow position of Uniswap protocol governance token exchange (UNI) reached an annual high. Position changes are indicative which refers to the amount of tokens flowing in and out of the exchange. Since early 2023, the metrics have been positive. And it has remained unchanged for the past 30 days.
Exchanges have more inflows than outflows when the change in net position is positive. When the size is in negative territory, it means investors are withdrawing or spending their tokens. As a result, the current conditions signal significant token movement, which could lead to potential selling pressure.
While larger flow changes may raise concerns about a potential UNI dump, it is very important to proceed with caution and take a variety of factors into account. This is due to the fact that changes in net position do not provide a reliable indicator of market direction or investor mood. Furthermore, a review on Network Value to Transaction (NVT) signals revealed that the metric increased to 120.86 on May 13.
NVT Signals, introduced in 2017, identify when market values and network utilization are far or near. Since this signal is high, the value of UNI is inflated given the current market cycle. The Relative Strength Index (RSI) is 41.94 on the daily chart. The indicator measures the momentum of an asset. When the reading exceeds 70, the asset is overbought. When it drops below 30, it indicates an oversold scenario.
Consequently, UNI’s RSI reading suggests that there is no substantial support for the bullish momentum. Instead, it is approaching bearish territory. The Directional Movement Index (DMI) also reveals that the -DMI (red) value is greater than +DMI (green). These indications describe the most likely asset movement to occur. However, this is also influenced by the Average Directional Index (ADX).
ADX (yellow) is 19.22 at the time of writing. It must be 25 or higher for this indicator to show strong directional support. Since that is not the case, negative forecasts may not be so severe . Meanwhile, activity on the Uniswap market fell from the previous week’s high. The drop in the value of the meme and trade triggers the drop, as one would expect.