Uniswap’s UNI token is flashing signs of a technical breakdown at $3.26, with analysts targeting a 17% decline to $2.70 within 72 hours as a selloff in the decentralized finance sector accelerates.
"There’s a tremendous risk-reward imbalance in DeFi," David Shuttleworth from Anchorage Digital's protocol team said. "Users will no longer accept the slightly higher (and sometimes lower) than risk-free rate they get by depositing in lending pools," especially given the latest wave of exploits.
The pressure on UNI comes as the broader DeFi market reels from the largest exploit of the year. Total value locked (TVL) across all DeFi protocols fell by $14 billion over the past two days to a one-year low of approximately $85 billion, according to DefiLlama data. Aave, the market's largest lending protocol, saw its TVL plummet from $26.5 billion to $17.5 billion as the crisis unfolded, data from the protocol shows.
At stake is the stability of the DeFi ecosystem, as contagion from the $292 million KelpDAO hack spreads. The exploit, which allowed an attacker to drain funds and reuse them as collateral across other lending protocols, has triggered a crisis of confidence, leading to a flight of capital toward safer, large-cap assets like Bitcoin while altcoins lag.
The selloff was triggered by a vulnerability in KelpDAO's rsETH token, which cascaded across the market as users rushed to withdraw funds amid fears of bad debt and a potential liquidity crunch on platforms where the asset was integrated. While the Arbitrum Security Council has frozen 30,766 ETH (worth about $71 million) linked to the exploit, the damage to sentiment is done.
This DeFi-specific turmoil contrasts with relative stability in major cryptocurrencies. Bitcoin has held above $75,000, supported by nearly $1 billion in weekly inflows to U.S.-listed spot ETFs, a sign of durable institutional demand. The divergence highlights a market environment where capital is concentrating in large-cap assets, leaving riskier DeFi tokens like UNI exposed to further downside if the $3.00 psychological support level breaks.
This article is for informational purposes only and does not constitute investment advice.
