Bitwise, a crypto investment company, has filed an S-1 form with the SEC seeking permission to launch a cryptocurrency ETF focusing on UNI tokens. UNI is the native token of the popular decentralized exchange Uniswap. Companies moving to launch ETFs of a cryptocurrency usually lead to increased legitimacy and a rise in price. But here, the UNI price went down by 12% to $3.26.
UNI’s price drop is less a reaction to its ETF prospects and more a chain reaction to the broader crypto market downturn. The crypto market lost more than 30% of its market cap in the last 30 days, wiping out over $1 trillion. The slump continues as Bitcoin dipped 6.41% today to $64,689.
Is UNI Price Drop an Unexpected Market Reaction?
UNI tokens usually rank among the top 40 cryptocurrencies by market capitalization. It is currently at the 34th position with a market cap of 2.05 billion. Uniswap has been gaining popularity as its direct crypto exchange feature lets users swap their coins without any intermediaries.
Uniswap is an Ethereum blockchain-based DEX that uses smart contracts with liquidity pools funded by users, which executes trades instantaneously. UNI is the company’s governance token that lets investors vote on upgrades and fee structures. It has a total supply of 899.06 million, of which 634.43 million is already in circulation.
In short, if the crypto market were bullish now, an ETF prospect on UNI would have raised its price significantly. But since the market is facing a massive downturn with BTC falling below $70k, the market fear-greed index is at 5 (extreme fear). Hence, investors are already pulling away from the market, with drop-buyers supporting major coins at their lower support levels.
Cryptocurrency ETF brings about legitimacy and inflows from the traditional market. But the current market conditions have muddled this prospect significantly- even for coins with a higher market capitalization. Hence, UNI falling through just like other coins despite a company filing for its ETF is expected.
How Bad is the Crypto Market Slump?
The CoinMarketCap fear and greed index went from a 49 (neutral) last month to an alarming 5 (extreme fear) today. The index was at an 11 yesterday and dropped by 6 points today, indicating that fear and volatility are getting worse. Two major coins, Bitcoin and Ethereum, experienced erosion of their market dominance along with disastrous capitalization losses.
Bitcoin fell 30.25% in a month and broke its support zone of $70k, and is now at $64,689. Ethereum fell harder with a 41.97% drop in price and erosion of more than 10% marketcap. ETH now trades at $1,891.64 as it dropped 10% more in the last 24 hours. Since the leaders have fallen this hard, recovery to post-slump levels would be harder for the entire crypto market.
Analyst Take on UNI
Binance projects a potential ROI of 135.43% for UNI as its value may fluctuate between $3.62 to $9.20. The project also projects an average price of $5.04 in January 2027. All these projections count on the crypto market recovering to its post-slump levels. As extreme fear and volatility continue to drain the total crypto market cap, investors are closely watching for U.S. legislation that can strengthen the buy-the-drop sentiment.
