OPtimism OP analysis Archives

2nd May 2024

Market Downturn? Not For Optimism: A16z’s Major OP Purchase Sends Price Skyrocketing By 9%

In a month marked by a challenging correction in the crypto market, Layer 2 (L2) blockchain protocol Optimism has emerged as a standout performer. Within the past 24 hours, Optimism’s native OP token skyrocketed by 9%, positioning it as the best-performing token among the top 100 cryptocurrencies.

Behind this surge lies venture capital firm a16z, which has reportedly invested around $90 million in Optimism’s OP token, signaling further institutional support for the layer 2 protocol.

OP Receives Major Investment

Sources familiar with the matter have revealed to Unchained that a16z has acquired a significant stake in Optimism’s OP token.

The investment, which comes with a two-year vesting period, underscores a16z’s interest in the Layer 2 protocol and aligns with its growing involvement in crypto. Notably, a16z’s portfolio already includes crypto exchange Coinbase.

The investment by a16z comes amidst notable activity and growth within the Optimism ecosystem. Optimism’s OP Stack has experienced increased usage, further validating its value proposition. The protocol’s ability to increase scalability and reduce fees on the Ethereum blockchain has also garnered significant attention.

Optimism’s spokesperson expressed enthusiasm for the investment, acknowledging the energy and momentum surrounding the protocol. The partnership with a venture capital firm like a16z is expected to fuel further development and innovation within the Optimism ecosystem.

On March 7, the Optimism Foundation disclosed the sale of approximately 19.5 million OP tokens, valued at nearly $90 million, to an undisclosed buyer.

These tokens were reportedly sourced from a 30% pool of OP’s original treasury, dedicated to the foundation’s working budget. Reports indicated that the buyer could delegate their tokens to third parties, enabling them to participate in Optimism’s governance.

The foundation clarified that, due to the private nature of the sale, specific details regarding the terms and purchaser were not disclosed.

Key Levels To Watch For Optimism

Despite the recent surge in the Optimism ecosystem and its native token OP, the token still trades well below its all-time high (ATH) reached on March 6, 2024, currently down over 47% from that level.

However, OP’s trading volume has experienced a notable surge, indicating continued interest in the token. According to CoinGecko data, the OP trading volume has increased by over 113% compared to the previous trading day on April 30, amounting to nearly $600 billion in 24 hours.

Optimism

Key levels to monitor for the token soon include OP’s significant resistance at the $2.62 price mark and a potential retest of the $3 zone.

However, a clear indication of a positive trend for the Optimism token would require a successful consolidation above the $3.92 zone, marking the end of the month-and-a-half downtrend structure.

Conversely, the $2.37 zone has proven to be a crucial support level for OP, as it has held for the past five days and prevented further price decline for the token.

Digging deeper, the $2.25 mark is also a key support, with the most critical support level at $2.11. This level holds the key to Optimism’s macro bullish structure, as it initiated the token’s current uptrend.

Featured image from Shutterstock, chart from TradingView.com

2nd October 2023

Optimism (OP) Climbs 6% A Day As Crypto Market Rebounds, What’s Next?

Optimism (OP) has posted notable gains today, October 2, trading at $1.45, with a 5% increase in the last 24 hours. Furthermore, its price has gained 15% in the last seven days.

OP’s rise coincides with the improvement in the general crypto market, which showed a remarkable recovery. However, whether OP will sustain the ongoing rally remains to be seen. But a close look at a few technical indicators may provide vital insights into its next price moves.

OP Approaches Overbought Zone As Buyers Sustain Rally

OP continues to show positive price momentum as buyers dominate the market. Also, it has formed a fifth consecutive candle on the daily chart, confirming active accumulation by traders. Its rally became prominent on September 29, when it broke above the Donchian Channel (DC) median band.

OP flipped the $1.41 resistance level to support today and edges closer to the upper band of the Donchian Channel towards the $2.50 resistance level. If the buyers sustain the rally above the $1.50 resistance, OP will likely move into the overbought zone.

Additionally, the Moving Average Convergence/Divergence (MACD) has risen above its signal line, displaying a strong buy signal. Also, the Histogram bars are green, confirming that the buyers are still active. More so, the Relative Strength Index (RSI) indicator displays a value of 64.2 and is rising to the overbought region of 70.

Based on these indicators, OP will likely enter the overbought zone in the coming days, implying that accumulation will continue. However, traders should look out for bearish resistance at the $1.50 level that could serve as a potential entry point for sellers.

OPUSD price chart

What Could Be Behind OP’s Recent Gains?

Besides the general recovery in the crypto market, Optimism records exciting developments in its ecosystem. One notable change is a September 29, 2023, proposal to change Optimism’s security model.

According to the proposal, the OP team aims to hand over the admin key for the OP Mainnet to public and decentralized participants. These participants will be the Security Council held accountable for Optimism’s Governance.

Although this proposal awaits approval, it creates engagement in the OP ecosystem, thus increasing investor interest and activity. And this increased activity exerts higher buy pressure on the token.

Furthermore, the Optimism Superchain is another innovation driving ecosystem growth. According to blockchain data provider Covalent, the Superchain is an interlinked blockchain network of individual chains tagged “OP chains.”

Interestingly, builders can use the Superchain to engage in on-chain development. However, they must comply with the Law of Chains, a set of community rules on how teams support public goods and decentralization.

The OP Mainnet is the first member of the Superchain. Again, it has recorded increased daily active addresses, higher than Arbitrum, which is declining in on-chain activity.

BuildOnBase, created by Coinbase, is the second member of the Superchain, aiming to attract billions of users. BuildOnBase ranked as one of the best-performing chains in 2023 and the fastest L2 to reach 100,000 users in 56 days.

These developments are likely driving the growth in the Optimism ecosystem, evident in its recent price surge.

21st September 2023

Optimism To Sell 116 Million OP Tokens Via Private Sale: Will The Price React?

Optimism has revealed its plans to sell 116 million OP tokens to seven private buyers. According to the update, this sale is for treasury management tokens.

Based on current prices, this sale will transfer approximately $159 million worth of OP tokens to the buyers. Given the sheer amount of the sale, some traders believe it will likely cause a decline in OP’s price.

Optimism Announces Sale OF 116 Million OP Tokens Following Third Airdrop Event

In detail, Optimism posted a community update on September 20 on selling approximately 116 million OP tokens. The tokens are from the unallocated portion of the OP Token treasury, and these tokens are part of the Foundation’s original working budget of 30% of the initial OP supply.

According to the update, the tokens are subject to a two-year lockup. During the lockup period, the purchasers can delegate the tokens to third parties for on-chain governance.

Also, the announcement stated that from September 20, several transactions will take place with the released tokens. It noted that the transactions are pre-planned.

It bears mentioning that this token sale comes a few days after Optimism announced its third OP airdrop to reward community members for participation in on-chain governance. Optimism released over 19 million OP tokens to over 31,000 unique addresses.

Meanwhile, the OP community received the announcement with mixed reactions, with one user expressing disappointment. He expressed concerns that the token sale will increase Optimism’s circulating supply, impacting the price.

Optimism’s Private Token Sale: Will It Affect OP’s Price?

Some observers have expressed concern that the sale will affect OP’s price negatively, as the buyers may dump their tokens. However, there are a few reasons why this is unlikely to happen.

Firstly, the sale is private, meaning the buyers are not required to disclose their identities or intentions for the tokens. Therefore, it makes it difficult for traders to anticipate the buyers’ actions.

Secondly, the tokens are from the OP treasury’s unallocated portion and are not part of the circulating supply. It means that the sale will have a minimal impact on the availability of OP on the open market.

Furthermore, the tokens are subject to a two-year lockup period. The lockup prevents buyers from selling them on secondary markets until at least 2025, reducing the likelihood of a sell-off that could depress price.

Overall, Optimism can fund its development by raising capital from investors without relying on the public. Such action could lead to increased demand for OP from bullish investors on the project’s long-term prospects.

OPUSD price chart

Historical Data Suggests Private Sales Could Boost OP Price

Other projects have held similar private sales in the past. Recall that Polygon raised $450 million last year in a private token sale led by Sequoia Capital India. Also, in 2021, Arbitrum raised $120 million in a private token sale led by Lightspeed Venture Partners.

In both of these cases, the private token sales positively impacted the price of the respective tokens. The Polygon MATIC’s price increased by over 50% in the two weeks following the announcement of the private sale.

Similarly, the price of AAVE increased by 20% in the two weeks following Arbitrum’s private sale announcement.

Therefore, based on this historical precedent, the private sale could benefit OP in the long run. However, note that the cryptocurrency market is volatile, and OP’s price is not guaranteed to increase.

5th August 2023

Optimism (OP) Tallies 13% In 7 Days Despite High Profile DeFi Hack

In the midst of the ever-changing cryptocurrency landscape, Optimism (OP) has shown remarkable resilience, posting a notable price increase of 13.53% in the past seven days. Despite facing a slight decline of 1.80% in the last 24 hours and a further 1.35% shrinkage within the hour, Optimism remains on an upward trajectory.

With the current price sitting at $1.68 per OP and still 48.38% below its all-time high of $3.26, traders and investors are eager to uncover the reasons behind its recent gains. This article explores the factors contributing to Optimism’s recent surge and analyzes its prospects.

optimism (OP) price has enjoyed a steady spike in the past week: Source @Tradingview

High Profile Hack Could Stall Optimism (OP) Bullish Trajectory

Optimism’s positive trajectory took an unexpected turn when Coinbase’s newly launched BASE network, built on the Optimism Stack, fell victim to a backdoor contract exploit. This unfortunate event resulted in the loss of 597 Ether, equivalent to approximately $1 million.

The exploit involved infiltrating a backdoor contract on the BASE Chain, which enabled the continuous minting of tokens that were subsequently sold for profit. The exploiters managed to mint 40 different tokens, generating significant profit, which was then moved out of the perpetrators’ address.

As BASE anchors the OP Stack, there are concerns that the recent exploit could have repercussions on all associated protocols, including the Optimism network. Furthermore, the hype surrounding BASE had attracted several new addresses to the Optimism network, potentially dampening investor sentiment and a subsequent impact on OP’s price.

The number of active addresses on the Optimism network increased following BASE’s launch in late February. However, the recent hack may stall this growth, as investors might exercise caution in the wake of the exploit.

Will The Bulls Sustain The Impressive Rally?

Despite the recent BASE exploit, Optimism (OP) has managed to maintain a sense of optimism in the market. The OP/USD daily chart displays promising signs of bullish momentum, with the bulls surpassing critical support levels. Short green candlesticks formed above the $1.631 support level indicate the market’s resilience and determination to keep the price afloat despite the challenges posed by the recent exploit.

The technical indicators further reinforce the bullish outlook for Optimism. The Moving Average Convergence/Divergence (MACD) remains above the signal line, characterized by green histogram bars that signify the asset’s bullish momentum. Additionally, the Relative Strength Index (RSI) has entered the overbought region, reaching a value of 75. This suggests a considerable increase in buying pressure on OP as investors show confidence in the token’s potential for future growth.

However, while the market sentiment remains positive, traders and investors should exercise caution. The recent BASE exploit has raised concerns about the potential impact on Optimism’s network and the broader sentiment surrounding the token.

The cryptocurrency market is known for its volatility, and external events can have significant implications for token prices. It is crucial for market participants to closely monitor developments related to the exploit and assess any potential consequences for Optimism’s price trajectory. Despite the positive indicators and bullish momentum, staying informed and vigilant in such a rapidly changing market is essential for making well-informed decisions.

(This site’s content should not be construed as investment advice. Investing involves risk. When you invest, your capital is subject to risk).

Featured image from iStock, chart from TradingView