Uniswap's UNI Token Faces Sell Pressure After Bullish Governance Proposal Sparks Rally

Uniswap's native token UNI witnessed a dramatic 42% price surge on Monday, driven by a governance proposal announced on November 10 that includes burning millions of UNI tokens to reduce supply and reward holders. This rally pushed UNI to breach key resistance levels, with the token trading as high as $9.71 earlier in the week.

However, technical indicators now signal caution. The On-Balance Volume (OBV) has trended downward over the past 48 hours, indicating selling pressure as prices climbed past $9. Fibonacci retracement levels suggest potential dips to $6.86 and $5.92, while the $8.1-$8.5 demand zone has flipped from support to resistance.

Market data reveals over $56 million in UNI inflows to Binance in the past week, pointing to short-term profit-taking. Trading volume dropped 49% to $1.14 billion, and derivatives volume fell nearly 50% to $1.83 billion, with open interest slipping 16% to $570 million. This aligns with a classic 'sell the news' event after the proposal.

The Uniswap Foundation's proposal aims to activate a fee switch, distributing 0.05% of liquidity provider fees to UNI holders, and burn 100 million UNI from the treasury. If approved, it could turn UNI into a yield-bearing, deflationary asset, potentially reducing supply by over 5% annually. Analysts, including CryptoQuant CEO Ki Young Ju, believe this may create a 'supply shock' for future gains.

Despite the sell pressure, fundamentals remain bullish. UNI was trading around $8 at press time, down 6.7% daily but up 50% weekly. Technical analysis shows consolidation, with the RSI at 59 indicating neutral momentum, and moving averages in a bullish configuration. Support is near $7.10, with resistance at $8.55.