As of the latest update, Uniswap (UNI) was trading at $16.45, registering a 3% increase in value over the past 24 hours. UNI has emerged as one of the standout performers in recent times, exhibiting a remarkable surge of over 78% in the last month.
The upward trajectory of Uniswap coincides with a broader recovery in the decentralized finance (DeFi) sector.
Statistics from DeFiLlama revealed that the Total Value Locked (TVL) in DeFi surpassed $156 billion earlier this week, marking its highest level since April 2022.
Alongside the resurgence in DeFi activities, the growing leverage is playing a significant role in influencing the recent price movements of Uniswap.
Unprecedented Reserves on Uniswap Derivative Exchanges
Recent data from CryptoQuant indicates that derivative exchanges are holding more than 69 million UNI tokens, setting a new record for derivative exchange reserves.
The surge in these reserves signifies heightened speculations surrounding UNI, potentially leading to increased market volatility.
Furthermore, there appears to be a discrepancy between the spot market and derivatives market, with a decline in reserves in the former. CryptoQuant’s data shows that spot exchange reserves are currently at their lowest levels, suggesting minimal changes in selling activities.
If the trend of heightened activities in the derivatives market persists, it could trigger significant price fluctuations, driven by unexpected liquidations.
Record High Open Interest to Market Cap Ratio
Uniswap’s Open Interest has been steadily climbing and has reached $326 million at the latest reading, reflecting a 3% uptick in a day.
This ascent has propelled the Open Interest to market cap ratio to 7.89%, reaching its peak since November 2022.
A higher ratio signals a greater level of leverage in the market, potentially exposing UNI to sharp market corrections if the price deviates substantially from derivative traders’ expectations.
Nonetheless, the current ratio, though increased, indicates that while speculative interest is growing, traders are exercising caution.
Insights from Uniswap Funding Rates
The prevalent positive Funding Rates suggest that more bullish sentiments are prevailing in the market, favoring an extension of Uniswap’s upward trajectory over a reversal.
Coinglass reports that UNI’s Funding Rates have remained positive since mid-October, indicating a willingness among long-position holders to pay higher costs to uphold their positions.
However, the Funding Rates for UNI have dipped from their earlier highs this month, suggesting that although market sentiment remains optimistic, the demand for long positions has waned slightly.