Uniswap’s $591mln burn sparks a deflation loop – UNI at $7.2 ONLY IF…

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Uniswaps $591mln burn sparks a deflation loop – UNI at $7.2 ONLY IF…

Deflationary measures have become increasingly popular across major crypto projects, especially token buybacks and token burns.

These mechanisms have played a significant role in market stability, helping avoid major price crashes and absorb selling pressure. Amid this growing trend, Uniswap joined the wave, with the community approving token burns.

Uniswap treasury burns $591 million of UNI

Source: DefiLlama

How did the market react？

After token burns, UNI recorded a positive response, with demand following across the market. In fact, Uniswap jumped to a local high of $6.4 before retracing.

At press time, UNI traded at $6.3, up 5.2% on daily charts. Over the same window, its volume hiked 52% to $297 million, while the market cap touched a monthly high of $4.6 billion.

The altcoins volume and market cap surged in tandem, reflecting increased on-chain activity and steady capital inflows.

Additionally, the market recovered from a recent distribution phase, as evidenced by Accumulation and Distribution Volume.

Source: TradingView

The accumulation side volume surged to 744.6k, and flipped the smoothed average of 500k, signaling increased buy-side activity.

Although the accumulation volume remains below 1.2 million peaks, buyers stepped into the market and displaced sellers. As such, the Buyers v Sellers index showed this shift in market dynamics, as UNI recorded a positive Netflow of 0.116.

Can the momentum hold？

As UNI faced reduced scarcity, the altcoins upward momentum strengthened, backed by organic demand. The altcoin flipped the 50 and 20 Moving Averages, indicating strong short-term upward momentum.

At the same time, its Stochastic Momentum Index made a bullish crossover and surged to 37, breaking out of oversold territory. These market conditions position UNI on a positive trajectory, setting it up for further gains.

Source: TradingView

Therefore, if buyers continue to accumulate, supporting the Uniswap token burn initiative, UNI could clear $6.4 resistance, reclaim $6.6, and target $7.2.

However, if the market impact is short-term and demand declines, UNI could retrace to $5.7.