According to Glassnode data, the exchange netflow position change of the Uniswap [UNI] protocol’s governance token reached a yearly high. The position change is an indication that refers to the number of tokens flowing into and out of exchanges. Since the beginning of 2023, the metric has been positive. And it has remained unchanged for the past 30 days.
Exchanges have more inflows than outflows when the net position change is positive. When the measure is in negative territory, it means that investors were either withdrawing or spending their tokens. As a result, the current state signals significant token movement, which could lead to potential selling pressure.
While the greater flow change may create concerns about a potential UNI dump, it is critical to proceed with prudence and take into account a variety of factors. 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 at the Network Value to Transaction (NVT) signal revealed that the metric increased to 120.86 on May 13.
The NVT signal, which was introduced in 2017, identifies when the market value and network utilization are far apart or close. Because this signal was high, the UNI value was inflated in light of the current market cycle. The Relative Strength Index (RSI) was 41.94 on the daily chart. The indicator gauges the momentum of an asset. When the reading exceeds 70, the asset has been overbought. When it falls below 30, it indicates an oversold scenario.
As a result, the UNI RSI reading indicates that there was no substantial support for bullish momentum. Instead, it was approaching bearish territory. The Directional Movement Index (DMI) also revealed that the -DMI (red) value was greater than the +DMI (green). The indication depicts the most likely movement of an asset. However, this is also affected by the Average Directional Index (ADX).
The ADX (yellow) was 19.22 at the time of writing. The value must be 25 or higher for this indicator to demonstrate robust directional support. Because this was not the case, the negative forecast may not be as severe . Meanwhile, activity on the Uniswap market has dropped from prior weeks’ highs. The reduction in meme value and trading sparked the downturn, as expected.