Optimism token has, alongside L2 Ethereum solutions been surging ahead of the Merge.
Optimism witnessed strong fundamentals in July and August.
OP could fall by a further 22%.
Optimism OP/USD is a Layer-2 scaling for the Ethereum network. Its role is to facilitate less costly and quick transactions on Ethereum. Following the Ethereum Merge, eyes were on alternatives and scaling layers for price reaction. Since the Merge has occurred, it is crucial to evaluate how Optimism has reacted.
Well, Optimism was the talk of the streets in July and early August as prices pumped. Whereas the gains were driven largely by speculations, a couple of fundamentals helped. One includes the liquidity mining program which Optimism launched on Aave in early August. The development pushed the deposits on Aave to Optimism up by a significant 493%.
The Ethereum Merge was also adding momentum to Optimism. The Merge is expected to increase the role of scaling solutions through a “Rollup-Centric Roadmap.” The roadmap allows Ethereum to become the data availability and settlement layer. It will leave the scaling role to Layer-2 Protocols.
OP risks another 22% drop as price falls post-Merge
Technicals are not convincing for the Optimism token. On the daily chart, the price drop coincides with a MACD crossover to the bear zone. That allowed the price to fall below the moving averages.
Assuming an extended correction, OP will fall back to the late August lows of $0.98. That represents a drop of around 22%. The bearish prediction will be invalidated if the price recovers above the 20-MA. It should be confirmed with a clear reversal and improved sentiment.
Optimism could continue to fall despite the expected benefit from the Merge. It suggests that the token already benefited from the post-Merge expectations. $0.98 is the next bottom for OP.