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- Uniswap reserves on derivatives exchanges have reached a record high of 69 million tokens.
- UNI’s open interest to market capitalization ratio also shows that market leverage is increasing.
Uniswap [UNI]at the time of writing, was trading at $16.45 after gaining 3% in 24 hours. UNI is among the top performers this month, with gains of more than 78% in the past 30 days.
Uniswap’s upward trend has coincided with a recovery in the decentralized finance (DeFi) space.
Data from DeFiLlama showed that the Total Value Locked (TVL) in the DeFi industry reached $156 billion earlier this week, the highest level since April 2022.
In addition to rising DeFi activity, an increase in debt appears to be influencing Uniswap’s recent price action.
Uniswap’s derivatives reserves reached record highs
According to CryptoQuant, more than 69 million UNI tokens are held on derivatives exchanges, marking the highest level of derivatives reserves in history.
Source: CryptoQuant
A spike in these reserves shows that there is increased speculative activity around UNI, which could result in market volatility.
Moreover, there is a difference between the spot market and the derivatives market due to declining reserves on the former market.
CryptoQuant shows that cash foreign exchange reserves are at a low point, indicating minimal changes in sales activity.
If the derivatives market continues to see increased activity, it could result in price fluctuations due to unexpected liquidations.
The ratio of open interest to market capitalization reaches a two-year high
Uniswap’s Open Interest has been gradually rising and stood at $326 million at the time of writing, after rising 3% in 24 hours.
This increase pushed the open interest to market capitalization ratio to 7.89%, the highest level since November 2022.
Source: IntoTheBlock
A higher ratio indicates greater leverage in the market, which could leave UNI susceptible to sharp market corrections if the price deviates widely from derivatives traders’ expectations.
However, given that the ratio is still at a low level, this indicates that while speculative interest has increased, traders are still cautious.
Uniswap funding rates show THIS
There are more bulls betting on Uniswap to expand its gains than those expecting the price to reverse its gains, as evidenced by its positive funding rates.
Read the one from Uniswap [UNI] Price forecast 2024–2025
According to Coinglass, UNI funding rates have been positive since mid-October, indicating that traders who take long positions are willing to pay more to hold their positions.
Source: Coinglass
However, UNI funding rates have fallen from the high levels seen earlier this month, indicating that while market sentiment is still bullish, demand for long positions has fallen.
