The world of cryptocurrency has seen a lot of development over the course of the last year or so. Not only have many tokens seen record price growth, but the popularity of decentralised finance (DeFi) has surged and it seems that there has been a spate of innovation across the sector.
At the forefront of this innovation is Uniswap. Cryptocurrency has long been touted as having the power to disrupt the traditional financial market - namely the idea that all transactions and values must in some way be controlled by a central authority. However, by providing a fully decentralised exchange (DEX), Uniswap is effectively the latest evolution of the original Bitcoin remit.
Whereas the first generation of cryptocurrencies offered a means of decentralised peer-to-peer payments, Uniswap and other DEXs offer a liquidity protocol that can facilitate financial exchange services without the need for a singular governing authority.
So far, this concept is proving extremely popular and Uniswap already has an all-time trading volume of some $240 billion - which is pretty impressive given that it was only launched at the end of 2018. The platform also has its own cryptocurrency, UNI, which is used as a governance token on the exchange.
So is UNI an essential addition to your crypto portfolio? In the following Uniswap price analysis for 2021, we will take a closer look at the exchange and exactly what it has to offer, as well as checking out a few forecasts from some of the top cryptocurrency exchanges.
Uniswap - an Overview
What is Uniswap?
Launched in 2018 by founder Hayden Adams, Uniswap is a completely decentralised cryptocurrency exchange. Effectively, it is a protocol for swapping ERC20 tokens but the way in which it uses the technology and facilitates orders means that users on the network can buy and sell various Ethereum-based tokens without the need for a central authority.
The technical particulars are, inevitably, hugely complex and going into intricate detail is far beyond the scope of this Uniswap price analysis for 2021. However, one of the key features is the liquidity pool.
Trading with Unswap Liquidity Pools
Whereas existing exchanges, such as Coinbase and Binance, rely on order book-based trading, where sellers of a particular token must be matched with a buyer and vice-versa, By incentivising users to stake their cryptocurrency in liquidity pools, Uniswap is able to operate without order-book based trading.
Uniswap users stake their tokens together to create a central pool that then facilitates trades that take place on the platform. This means buyers and sellers don’t have to wait for an opposite party for trades to be made, but instead, for a small fee, they can trade instantly via the pool at a known price, which is also calculated according to Uniswap protocols.
Liquidity providers are issues with a token that represents the value of their stake. For example, if a liquidity pool had a total value of $100,000 and you had contributed $10,000, you would receive a token worth 10% of the pool. This token can then be exchanged for a relative share of the trading fees accrued via that liquidity pool.
When it comes to setting the values of tokens on the exchange, rather than relying on buyers and sellers of an order book, Uniswap is what’s known as an Automated Market Maker. Put (very) simply, this means it uses a mathematical algorithm to calculate price based on a token’s supply and demand within its liquidity pool.
The Role of UNI on the Uniswap Exchange
UNI is the native token of the Uniswap exchange and was launched in the latter half of 2020. Whereas the likes of Bitcoin and Litecoin are designed to be used as digital payment, UNI is actually the governance token of the Uniswap DEX.
What does this mean? Well, holders of a governance token can vote and comment on certain developments - effectively having a say in the direction of the Uniswap project. This is an important factor for any decentralised system, as it means the organisation behind the network is relinquishing a degree of control to Uniswap users - effectively making for a more democratic system.
History of Uniswap Price Movement
Despite its relatively short existence, Uniswap’s native cryptocurrency has already seen some pretty impressive price movement.
Having been listed on the 17th of September at $3.44, UNI had already doubled in value after just two days, hitting $7.10 on the 19th of that month. The surge proved to be something of an initial flash, however, and UNI settled back to around the $3.40 for the rest of 2020.
However, Uniswap’s popularity soon aroused widespread investor interest and UNI was once again on the move. In January of 2021 alone, the coin saw a value increase some 275%, rising from $5.17 to $19.39.
The cryptocurrency market in general also saw surging prices throughout February and UNI was no exception. Prices reached as high as $29 before going into a short decline and dropping to just over $22 by the time March came around. This was then immediately followed by another bull, which saw prices hit $34.62 just a week later.
April saw another impressive bull, which saw UNI reach an all-time high of $43.67 before the month was out, equating to a 740% increase on its price at the start of 2021.
Suffice to say that UNI’s price movement has been impressive thus far. In less than 8 months, the trading price of the coin has risen by a staggering 1170%. Naturally, this has prompted plenty of interest from investors and there’s every reason to believe that another bull could be on the horizon for Uniswap.
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Experts predictions for Uniswap in 2021
DeFi has been one of the major crypto success stories over the last 18 months or so, with many investors realising there are now means of putting their crypto holdings to work rather than simply holding onto them and hoping for a price increase. As the platform undergoes its recent v3 upgrade, we consider what some leading industry figures have to say:
Mike Novogratz, CEO and founder, Galaxy Digital
Novogratz has been highly vocal about his support for DeFi. In a recent interview, he listed Uniswap amongst five cryptocurrencies having serious potential as investment opportunities (the others being Aave, Chainlink, Compound, YFI).
"There's a chance that those five blow up the world, not in the next week, or the next month, but in the next five years," he said. "Those are the tokens that want to take the banks and tear the banks limb from limb, that want to replace JPMorgan and the New York Stock Exchange and so I put some money into those things. It's much riskier, but if it works, it's going to be a much bigger payoff."
Hisham Khan, CEO of Cryptocurrencies.AI, CEX-DEX
Mr Khan described the Uniswap V3 upgrade as the “next step” in the evolution of Automated Market Makers. “Liquidity Providers will now be able to better choose where they allocate their liquidity, which will bring greater capital efficiency, while reducing slippage, further benefiting traders on the booming decentralized exchange,” he added.
Martin Köppelmann, Co-Founder and CEO At Gnosis.
“The Uniswap v3 launch is one of many upgrades innovating the future of decentralised exchanges, and we hope to see the DeFi space continue to put users first and give them more control over their digital assets.”
Factors affecting Uniswap price
Let’s take a look at the top factors that can affect the price of UNI.
The v3 Upgrade
It seems that 2021is the year of the upgrade for many top crypto networks, with Ethereum, Cardano and EOS all overhauling their protocols. Uniswap has also made a few changes to its infrastructure with its v3 upgrade.
In a nutshell, the Uniswap v3 upgrade will introduce concentrated liquidity, offering liquidity providers much more control over what price ranges their capital is allotted to. There will also be the implementation of multiple fee tiers, allowing those staking their crypto to better manage their risk/reward factors.
Network upgrades, in theory, should have a positive impact on price - but only if the upgrade proves a success. If there are issues, then Uniswap could find itself losing users to rival DEXs and in turn investor sentiment may cool, which will see prices drop. It’s also worth noting that it can take some time for the price of UNI to react to the network upgrades - it could even be 2022 before things really take effect.
Uniswap works by incentivising users to stake their cryptocurrency in liquidity pools, which in turn allows people to trade cryptos via the exchange. Both of these features require a balance of liquidity providers and people actually using the exchange to swap currencies.
If, for example, there is a lack of liquidity providers and traders find their transactions are taking too long to complete, they may well jump ship to other DEXs such as SushiSwap or PancakeSwap. Similarly, if liquidity providers are not receiving enough profit from trading fees, they may choose to stake their crypto elsewhere. Continued popularity is, therefore, an important factor in how the price of UNI may move in future.
Regulation is always a factor for cryptocurrency. In theory, it only takes one piece of legislation to seriously damage the entire digital currency industry.
Nowhere is this more apparent than with decentralised exchanges, as there could also be tax implications if governments decide to crack down on the buying and selling of cryptocurrency. Of course, this is all speculation, but anyone choosing to invest in Uniswap will need to keep a close eye on any regulatory developments.
Uniswap price analysis for 2021
At the time of writing, Uniswap was trading at $39.710, having declined slightly since its all-time high set in April. Of course, no one can say for sure how the price will move in future, but one of the best ways to build a realistic Uniswap price analysis for 2021 is by correlating the forecasts and technical analyses of various other platforms.
We found that many platforms are somewhat reserved with their Uniswap UNI price predictions. TradingBeasts, for example, sees Uniswap actually declining in price, dropping to an average trading price of $37.029 in June, before recovering towards the end of the year and finishing December at a potential high of $52.692.
DigitalCoinPrice is more optimistic. According to its technical analysis, Uniswap UNI will trade above $50 for much of the year, although dipping slightly in August. The platform believes Uniswap will reach its highest price of $64.06 in November, before dropping slightly before 2021 is out and dipping just below the $60 mark in December 2021.
Amongst the most ambitious Uniswap price predictions for 2021 was that of WalletInvestor. It has UNI climbing steadily from June onwards, breaking the $50 barrier in July before closing the year at what would be a record price of over $86 per token.
Should you invest in Uniswap in 2021?
Most crypto analysts are predicting that Uniswap will grow but the extent of that growth varies depending on who you ask. We think that Uniswap certainly has the potential to be a good investment in 2021 and if DeFi continues to grow in popularity, there is every chance that now could be the ideal time to add UNI to your portfolio.
However, Uniswap does present a riskier investment. Its token price has seen significant growth recently and it isn’t beyond the realms of possibility that this could cool in the coming months. As such, Uniswap might be better viewed as a mid to long term investment option for those willing to take on the risk.
Don't Miss: Is It Worth Investing in Uniswap?
DeFi is still an emerging field and no one can say what the future holds for it. However, one thing that works in Uniswap’s favour is the fact that it has already emerged as one of the market leaders and we all know that this counts for a lot in the cryptocurrency market.
There are, of course, numerous risks and potential pitfalls for Uniswap, but that has been true of just about any cryptocurrency at one stage or another. The likelihood is that, as long as the crypto market remains strong, so will DEXs. If Uniswap can continue to deliver a reliable and profitable service for both traders and liquidity providers, then there’s every reason to believe the price of UNI will increase over 2021 and beyond.
As always, any investment carries inherent risk and those considering investing in Uniswap should ensure they understand what the platform offers before adding UNI to their portfolio.
Looking to invest in Uniswap?
If the concept of Uniswap has piqued your interest, then one of the simplest ways to invest in the platform is by buying into its native cryptocurrency, UNI. To do so, you’ll need a reputable broker that lists the token.
We recommend eToro for most users, as it has a highly accessible trading platform as well as plenty of educational resources on the crypto market and trading in general. eToro also has an excellent reputation in the industry, so users can rest assured they are getting top-notch service.
eToro – Top Exchange to Buy Uniswap
eToro have proven themselves trustworthy within the Crypto industry over many years – we recommend you try them out.
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Uniswap price analysis 2021 - FAQ
Is Uniswap a good investment in 2021?
Uniswap is one of the most exciting projects in the crypto space and has the potential to be a very good investment in 2021. Most analysts are predicting growth but potential investors should ensure they understand the concept of DEXs and the role of UNI - Uniwap’s native token.
Will Uniswap reach $50 in 2021?
After reaching a record high of over $46 in April 2021, it seems $50 is the next target price for UNI. Whilst some platforms predict it will fall short of this target this year, WalletInvester believes Uniswap can actually reach $86 before the year is out.
What are the experts predicting for Uniswap in 2021?
There is plenty of support around for Uniswap and DeFi in general. For example, Mike Novogratz of Galaxy Digital believes DEXs could disrupt the banking world and Uniswap, amongst others, could prove to be a very smart investment.
Where can I buy Uniswap?
If you are looking to invest in Uniswap in 2021 then you’ll need to find a broker that lists the currency. We recommend eToro as it has a great reputation and plenty of resources for learning more about your chosen cryptocurrency.