Optimism crashes 16%, but how long will bears dominate? – Crypto News – Crypto News
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Optimism crashes 16%, but how long will bears dominate? Optimism crashes 16%, but how long will bears dominate?

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Optimism crashes 16%, but how long will bears dominate? – Crypto News

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8 months ago

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Key Takeaways

Why is Optimism’s price down today?

The price drop was driven by bear strength, liquidity withdrawal, and a decline in TVL.

Will OP bears retain dominance?

Although bulls have shown interest, they did not appear to be sufficiently motivated to force a shift in the market structure.

OP has been emulating the broader crypto weakness, appearing among the top 3 by losses for the top 100 cryptos by market cap.

The price of OP declined by 16% at the time of writing, extending the losses since the 20th of November to 27%.

Will OP’s bear dominance prevail?

The charts clearly showed bear dominance as Optimism [OP] reached new lows, dropping under $0.30.

The drop was caused by capital rotation to Bitcoin [BTC], which fell below $85,000; thus, traders rushed to buy it at a discount.

Additionally, privacy coins that surged while the market declined drained capital from OP, which has consistently decreased throughout this week.

Sellers were gaining momentum, as the Bull Bear Power (BBP) indicator showed with its increasing bars. The Bollinger Bands expanded due to the high volatility during the price drop.

The drop comes following a period of sideways consolidation movement characterized by lower highs and lows.

Notably, the 4-hour timeframe formed a base by printing a bullish Doji candle. This suggested the possibility of bulls retaliating, a common occurrence following new lows.

Optimism

Source: TradingView

In case altcoin weakness stays alongside that of BTC, OP is likely to suffer more if bulls do not claim control. Bears remained strong even though bulls were reacting after OP wicked below $0.30.

OP price decline was not driven by technical structure and capital rotation alone; on-chain activity was also in the same trajectory.

Transactions, liquidity, and TVL decline 

The number of monthly transactions was at 57.4 million previously, but the projections indicated that the expected output at the end of this month is way below.

At this pace, the end was anticipated to be at 55.6 million, with the current count at 39.3 million.

OP

Source: Dune

In the meantime, the Total Value Locked (TVL) declined by 4% in the past 24 hours, reaching $501.4 million.

The chain’s stablecoin market cap experienced a drop of 2.76% over the past week, suggesting a withdrawal of liquidity. All these led to the daily decline.

Final take 

Optimism was dropping hard in the past week as bulls showed signs of return, though they were weak. OP could reverse only if price reclaims $0.31 and goes ahead to flip $0.40.

Importantly, a series of higher lows and highs need to be observed to ascertain this shift in market structure.  Otherwise, bears remain in control, and more drops could come.

Next: SOL ETFs launch, RWAs surge – Is the crypto market sleeping on Solana?

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