Stopping the decline of Optimism: Can it overcome the long-term downtrend?
In the past week, the use of cryptocurrency by Optimism [OP] has increased by 28% according to data from Nansen. This increase far exceeds that of other Layer 2 networks, demonstrating the inherent strength of this ecosystem. Although the Token price remains constrained in a prolonged downtrend, the increased activity indicates the potential for a positive shift in the near future.
Currently, the price of OP fluctuates around $0.566, above a historically strong support area. The increased trading volume reflects the underlying strength of the network, although the price has not broken out of the extended accumulation zone.
Can we expect a sustainable price increase from the current price level?
This question has piqued the interest of many analysts. In this context, the opportunity for OP to break out will depend on the ability to form convincing technical patterns, as well as positive market sentiment factors from large capital flows.
Limit of the downtrend
For several consecutive months, OP has been moving within a clear down channel, forming progressively lower highs and lows. Recently, the price touched a low around $0.55, an important temporary support level. Each time this area is touched, buying volume tends to increase, reinforcing its role as support.
However, repeated testing will weaken the strength of this support level. If buyers cannot maintain upward momentum in the near future, the down channel may break, leading to a deeper correction in the short term.
Source: TradingView
Probability of breakout from the accumulation zone
The 30-day volatility index of OP has sharply decreased from 143.81% to 104.12%. This contraction reflects the market sentiment of ‘stagnation’, waiting for a clear guiding factor to trigger a breakout.
Historically, such volatility patterns often signal that strong breakouts or significant downturns are imminent. Solid support areas, combined with low volatility indices, open up a high possibility for ‘explosive’ moves on OP's price chart.
Source: IntoTheBlock
The NVT index warns of danger
The Market Value to Transaction Quantity ratio of OP has surged to 963.78, indicating that the market capitalization has far exceeded the on-chain transaction volume. This is often a warning signal of overvaluation when the economic flow is not sufficient to support the current valuation.
Close monitoring of network activity will be necessary to determine whether this NVT index could lead to a price correction or not. If trading volume does not increase significantly, the risk of a correction will become increasingly apparent.
Source: Santiment
Is the market waiting for a big ‘stimulus’ from the outside?
Statistics reveal that on June 19, the inflow and outflow of OP were almost balanced, with total values of $5.32 million and $5.31 million, respectively. This balance reflects investors' cautious sentiment, as no clear trend has formed in the market.
This causes investors to temporarily adopt a wait-and-see attitude for clearer confirmation signals before starting long-term strategies or significant leverage. Currently, the price fluctuates around $0.56, maintaining a sideways state, with the trend still unclear.
Source: Coinglass
Could liquidated positions be a strong pull for the next turnaround?
The large liquidation chart of Binance for the OP/USDT pair shows long and short liquidation points at price levels around $0.558 and $0.575. When the price is within this area, breakouts or breakdowns can trigger mass liquidations, creating a sudden force for the market.
Traders with leveraged positions need to be cautious, as any fluctuations could trigger extreme volatility phases, causing the market to quickly move in unexpected directions.
Source: Coinglass
Can Optimism escape the downward trend in the near future?
Although the on-chain activity of the cryptocurrency Optimism shows positive signs, the technical and valuation indicators remain unclear. Breaking through the areas of low liquidation or short-term resistance levels will determine the likelihood of this Token breaking out.
A high NVT index indicates the potential for a price correction if buyers cannot drive trading volume high enough to justify the current valuation.
Currently, the battle between demand and caution is still ongoing around the range of $0.55–0.57. Investors need to closely monitor signals to guard against risks and seize opportunities from potential breakouts in the upcoming period.
Source: https://tintucbitcoin.com/optimism-tang-28-lieu-op-thoat-bay/
Thank you for reading this article!
Please Like, Comment, and Follow TinTucBitcoin to stay updated with the latest news about the cryptocurrency market and not miss any important information!
