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Uniswap’s (UNI) price dip accelerated over the past 24 hours after Uniswap Labs received a Wells Notice from the US Securities Exchange Commission (SEC). This saw UNI drop by 18% over the past day.
As of the time of writing, UNI was trading at $9.26 with a strong likelihood of getting to the key support level of $8 within a few trading days. Will UNI’s price rebound from this negative spotlight by the SEC?
What is Wells Notice and Why was Uniswap Served One?
The Wells Notice is not a formal prosecution or regulatory enforcement document. It is an early warning that the SEC will take enforcement action against suspicious projects.
In the past, projects such as Ripple received the SEC’s Wells Notice which immediately led to its delisting from Coinbase. However, the Wells Notice served to Uniswap Labs did not explain the specific reasons, which requires Uniswap Labs to fully prove its innocence.
Reacting to the notice, Uniswap Labs’ official X put out a statement, assuring users of the safety of the platform and its products while calling the Notice “The latest political effort to target even the best actors in crypto like Uniswap and Coinbase.”
Blockhead
Price Reaction to Wells Notice
According to Lookonchain, following the SEC Wells notice received by Uniswap Labs, three whales sold 2.03 million UNI (approximately $20 million), causing the massive price drop of UNI.
The spot market price action reflected the sell-off with the Relative Strength Index hovering at the oversold zone while significant capital outflows followed as registered by the Chaikin Money Flow’s (CMF) reading of -0.30.
This offers multiple trading opportunities for traders. Short-term traders can jump on the selling pressure with potential profit levels at $6 and $8. On the other hand, long opportunities also exist, especially from the $8 support level. This could be a potential area for buyers to go long if price holds at the support level.
With the Uniswap Protocol processing over $2 trillion in volume, its survival is vital to the development of the entire DeFi industry.
Disclaimer: This article does not constitute trading, investment, financial, or other types of advice. It is solely the writer’s opinion. Please conduct your due diligence before making any trading or investment decisions.
