There can be two contrasting sentiments within the cryptocurrency community right now. While Celsius Network has become another major crypto market participant to file for bankruptcy, a sharp contrast can be seen at the other end of the spectrum.
Celsius’ native token CEL is on a rise right now, and so are most other major cryptos, including Bitcoin and Dogecoin. This year has yet again established that crypto prices can swing in any direction and that there is a very limited correlation with any external forces. In the same scheme of things, Uniswap, a major DeFi player and described as an automated market maker, first fell sharply and then rose quickly over this week.
Let us explore what is going on with Uniswap cryptocurrency and what it might indicate.
What exactly is Uniswap?
Market participants within the crypto industry usually have complicated operations. Celsius and Voyager promised high returns to backers, however, questions arose about their business model in the wake of the freezing of withdrawals.
Uniswap claims to be a liquidity provider, a decentralised platform that enables the swapping of tokens, alongside voting features to not let operations become centralised. Celsius is said to have centralised operations, which could be one reason why the protocol suddenly froze withdrawals, and the users had no say in the decision. Notably, at the heart of the entire arrangement of Uniswap, are ERC-20 tokens, also referred to as altcoins, which can gain or lose very sharply over a short period.
The Uniswap Protocol is said to support multiple DeFi apps and also allow developers to build new tools. TrustWallet, a cryptocurrency wallet, and Index Coop, which claims to provide crypto index products, are a few examples of products built by using the Uniswap Protocol.
Why did the UNI token fall this week?
UNI, which is the token used for the governance of the decentralised Uniswap ecosystem, has suffered price swings this week. According to CoinMarketCap, the token first fell from nearly US$6.5 to under US$5.5 between July 11 and July 12.
Now, the UNI token is on a rise, with the price soaring to over US$7 on July 15. As of writing, the 24-hour trading volume of the UNI token was up almost 30%.
The probable reason why the UNI token first fell was reports of a phishing attack. Binance, a major crypto trading platform, responded by saying that the Uniswap Protocol was “safe”. But before this could be announced, UNI crypto had already lost value. In later tweets, Uniswap confirmed the phishing attack but also reassured that there was “no exploit”.
The present rise in the price can likely be attributed to the announcement that Uniswap has been launched on Celo, a Layer 1 blockchain service provider.
Data provided by CoinMarketCap.com
What does this indicate?
It appears as if the crypto market has little correlation with significant developments like a major participant declaring bankruptcy. The Celsius token is rising amid the company’s bankruptcy news, and the UNI token has mounted a stunning comeback even after a phishing attack on Uniswap Protocol was confirmed.
Bottom line
Prices of cryptocurrencies, regardless of which project the native token represents, are vulnerable to unpredictable price fluctuations. The UNI token is now being expected by enthusiasts to cross US$10 in coming days. However, the sharp fall and rise over this week suggest nothing is certain even in the near-to-medium term.
Also read: Amid GameStop & LimeWire platforms’ launch, a look at top NFT artists
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