Uniswap (UNI) is once again gaining value after rising from its six-month low, following a 100 million token burn. The burn did not just help UNI recover, but it also brought about an end to the 4-month-long downward trend.
Uniswap has been on a downward trend since August, making lower highs and lower lows. The token was trading close to $12 in August, and four months down the line, UNI is now priced at $6. It shed almost 50% of its value within the past 4 months, making a recovery impossible.
During the crash, there were moments when UNI was in a free fall, and there were other moments when the token tried to consolidate, but failed.
The token tried consolidating near strong support zones like $6.2 and $7.8, but the selling pressure was too high. Similar to the consolidation phases, there were also the vertical falling stages. UNI had a free fall from $8.5 to $5 when a death-cross occurred. The death-cross is a bearish signal that two moving average lines show when they intersect. In particular, when the 50-day MA intersects the 200-day MA, which is below it, then a death-cross occurs.
Token burn stops UNI’s downtrend
To stop the price from further falling, the UNI team stepped in with a token burn and successfully completed it yesterday. The team burned 100 million UNI worth about $596 million, along with some other fee reductions.
When tokens are burned or sent to unknown wallet addresses, it shrinks the circulating supply, which eventually helps amplify the demand and thereby the price. Although not all token burns result in a price spike, the token burn worked out for UNI, and the prices have recovered from as low as $5, and it now trades at $6.25. Given that the token continues this newly established uptrend, the next target would be at $7.2, a major resistance level where the 200-day MA line lies.
