Optimism price crashed to the lowest level since July 28 as sentiment in the cryptocurrency industry worsened. OP dropped to a low of $1.3690, which was about 40% below its all-time high. Its market cap retreated to about $302 million.
What is Optimism and why is it falling?
Optimism is a leading layer-2 blockchain project that aims to help developers to supercharge their applications. As a sidechain, Optimism works by processing transactions away from Ethereum’s mainnet.
As a result, it solves some of the biggest challenges that exist in Ethereum like slow speed and high transaction costs. Optimism competes with other popular layer 2 networks like Polygon, ImmutableX, and Loopring.
Optimism has been used to supercharge many applications. Some of the biggest apps in its ecosystem are Aave v3, Synthetic, Velodrome, Uniswap, Perpetual Protocol, and Curve among others. According to DeFi Llama, the total value locked in Optimism rose to an all-time high of over $1 billion. This is a substantial amount considering that the TVL stood at less than $200 million in July.
Optimism has also been used to supercharge NFT projects. Some of the top NFT ecosystems using Optimism are Quixotic, Backed, OptiPunks, and NiftyKit among others. Other parts of its ecosystem are bridges like Synapse Protocol, Across, and Hop Exchange.
Optimism price has deviated from other cryptocurrencies. While popular coins like ETH and Ethereum Classic have surged to the highest point in months, Optimism has been falling. It has declined by more than 40% from its highest point this month even as its TVL surges.
Optimism has fallen because of the overall profit-taking among holders who benefited as its price jumped by over 450% from its lowest level in June this year. Historically, financial assets tend to stabilize after such a strong move.
Optimism price prediction
The three-hour chart shows that Optimism price rose to a high of $2.23 this month. Since then, it has dropped by about 40% as investors take profits. It has managed to move below the 25-day and 50-day moving averages. Also, the pair has dropped below the important support level at $1.3895, which was the lowest point since August 14th.
It has also formed a descending channel pattern that is shown in green. Therefore, the coin will likely continue falling a sellers target the next psychological level of $1.00.