The value of Optimism (OP) has been skyrocketing because the starting of July resulting from its proximity to Ethereum.
Notably, OP’s worth rallied by almost 300% in over a month to succeed in $2.31, its second-highest stage on file, on Aug. 4. The token acquired its bullish cues primarily from the euphoria surrounding Ethereum’s potential transition to proof-of-stake in September by way of an improve known as “the Merge.”
OP/USD four-hour worth chart. Supply: TradingView
Why the “Optimism”
To recap: Optimism is an Ethereum rollup resolution. In different phrases, the so-called layer-2 resolution handles a bundle of Ethereum’s transaction verifications off-chain to spice up scalability on the primary chain.
Optimism may benefit from the Merge resulting from Ethereum’s “Rollup-Centric Roadmap,” which turns its principal chain right into a settlement and information availability layer and locations scalability within the fingers of layer-2 rollups by way of “danksharding.”
“At the moment, with the mixed rollup and Ethereum structure, the present Ethereum-only transaction throughput of 15–45 TPS might scale to as a lot as 1,000–4,000 TPS,” famous Ally Zach, a researcher at Messari, including:
“The introduction of shards has expanded the information storage capability for rollups to extend this throughput to [the] north of 100,000 TPS.”
That explains why OP and different layer-2 tokens have responded positively to the Merge announcement on July 15.
Ethereum layer-2 tokens and their performances on totally different timeframes. Supply: Messari
OP worth might drop 30% in August
Regardless of robust fundamentals, OP’s technical metrics recommend its rally might exhaust within the coming weeks.
On the four-hour chart, OP’s rising worth coincides with its falling relative power index (RSI), indicating “bearish divergence.” In the meantime, the tried breakout above the $2-level has confronted robust rejection twice since July 29, together with its 15% drawdown after peaking out regionally at $2.31 on Aug. 4.
OP/USD 4-hour worth chart. Supply: TradingView
Subsequently, an prolonged correction might have OP take a look at its 50-4H exponential shifting common (50-4H EMA; the purple wave) close to $1.54 as its interim draw back goal. This curvy stage has restricted OP’s draw back try on Aug. 2.
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Furthermore, a break beneath the 50-4H EMA might push OP to $1.36, down 30% from at the moment’s worth. Apparently, the $1.36-level additionally served as assist in August and coincides with a multi-month ascending trendline assist.
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