Uniswap's UNI token has posted strong gains over the last 24 hours, rallying 5.8% to trade at $6.19. The decentralized exchange's governance token has seen even more impressive performance over the past week, surging 18.7% in 7 days.

UNI Leads Market Higher

UNI has dramatically outperformed Bitcoin and Ethereum over the past week. While UNI has rallied close to 19%, Bitcoin and Ethereum have posted modest gains of 3% and 5% respectively.

This shows traders are favoring UNI over the broader crypto market right now. Uniswap's dominance in decentralized trading is fueling bullish sentiment for its native token.

Technicals Suggest Upside Momentum Building

Looking at the charts, UNI seems to be building upside momentum after breaking out of its three-month range between $5 and $6. The Relative Strength Index is rising but not yet overbought, indicating more room for the rally to extend.

If the bulls can sustain UNI over $6, the next target is the psychological $7 level. A move above $7 would invalidate the series of lower highs in place since March, opening the door for a retest of 2022 highs around $9.50.

Uniswap v3 Upgrades Driving Demand for UNI

Uniswap's recent introduction of concentrated liquidity pools in v3 appears to be catching on with traders. This innovation improves capital efficiency for liquidity providers.

As Uniswap v3 gathers steam, demand for the network's governance token UNI may rise. Additional protocol upgrades down the road could further boost UNI's appeal.

Meanwhile, speculation around a potential Uniswap IPO continues to swirl. This would be a seminal event for both Uniswap and the broader DeFi space.

Will Regulatory Risk Hamper UNI?

As a leading decentralized exchange without KYC requirements, Uniswap occupies a legal gray area. Its avoidance of strict regulations that govern centralized exchanges allows Uniswap's open system to thrive but also creates uncertainty.

If regulators directly target DeFi protocols like Uniswap, that could dampen enthusiasm for UNI in the short-term. However, many believe comprehensive regulation remains years away.

Barring any sudden regulatory crackdown, Uniswap appears poised to maintain its market-leading position for the foreseeable future. This should support UNI's ongoing rally as long as fundamentals remain positive.

Can UNI Reach New All-Time Highs This Cycle?

After peaking around $45 last year before plummeting 86%, can UNI reclaim its all-time high this cycle?

For UNI to reach new peaks, Uniswap would need to continue increasing its dominance in decentralized trading. With rivals like Sushiswap on its heels, Uniswap cannot afford to stagnate.

However, if the protocol can keep innovating and onboarding users to its concentrated liquidity pools, UNI could ride a new DeFi wave higher, especially amid a risk-on environment with ample liquidity. Still, UNI would need to rally over 600% from current levels to eclipse its former high. This remains a tall order in the uncertain macro context.