Why is Uniswap (UNI) crashing?

• Uniswap price trades in the red on Wednesday after falling nearly 9% in the last two days.
• Santiment’s Exchange Flow balance for UNI shows a positive spike, suggesting selling pressure from investors.
• Latest Lookonchain data showed a whale deposited 2.25 UNI tokens worth $13.71 million into Kraken, likely to cut losses.

Uniswap (UNI) price trades in the red on Wednesday at $5.84 after falling nearly 9% in the last two days. This downward trend is further supported by UNI’s Exchange Flow balance, which shows a positive spike. Moreover, Lookonchain data shows that on Wednesday, whale wallet deposited 2.25 UNI tokens worth $13.71 million into the Kraken exchange, likely to cut losses.

Uniswap on-chain data shows a bearish bias 

Uniswap price continues to decline, trading around $5.84 on Wednesday, reaching levels not seen since August 7, 2024, this week. Looking down on UNI’s on-chain metrics clearly shows its bearish outlook.

Santiment’s Exchange Flow balance for UNI shows the net movement of tokens into and out of exchange wallets. A positive value indicates more UNI entered than exited, suggesting selling pressure from investors. Conversely, a negative value indicates more UNI left the exchange than entered, indicating less selling pressure from investors.

In UNI’s case, the Exchange Flow balance has spiked from -428,920 to 2.23 million from Tuesday to Wednesday. This uptick indicates increased selling pressure from investors.

During this event, the UNI Supply on Exchanges also increased by 2.67% in one day. This is a bearish development, which further denotes investors’ decreasing confidence in Uniswap.

UNI Exchange Flow balance chart. Source: Santiment

Santiment’s Daily Active Addresses index, which tracks network activity over time, also paints a bearish picture for Uniswap.  A rise in the metric signals greater blockchain usage, while declining addresses point to lower demand for the network.

In Uniswap’s case, Daily Active Addresses have been constantly falling since mid-November, indicating that demand for UNI’s blockchain usage is decreasing, which doesn’t bode well for Uniswap’s price.

UNI daily active addresses chart. Source: Santiment

According to Lookonchain data, a whale wallet holding 2.25 million UNI tokens worth $13.71 million was transferred to the centralized exchange Kraken on Wednesday.

This wallet had accumulated these tokens at an average price of $6.92 between September 7, 2023, and November 18, 2024. At its peak, the whale had an unrealized profit of $26.5 million but is now down $1.86 million, so these transactions on Wednesday are likely to cut losses. If done, it would further increase the selling pressure on UNI and cause a fall in its prices.