After Arbitrum’s 50% rally, is Optimism (OP) next Layer 2 altcoin to explode?

With Arbitrum’s ARB exploding in the last week, things are starting to heat up for altcoins, especially the Layer 2 tokens. With the decline in Bitcoin dominance and capital rotation, altcoins could start to surge soon.

Also read: Ethereum and altcoins gear up for alt season with this move in Bitcoin dominance

Recipe for alt season

A decline in Bitcoin dominance indicates that capital is moving away from BTC to other altcoins. In a way, it denotes a rotation of capital, aka profits, into other riskier assets. This is why the chart attached below shows a slow uptick in altcoin dominance. 

BTC vs Altcoin dominance chart

In addition to the rise in altcoin dominance, investors should note that profits from Arbitrum have a high potential to rotate into other top Layer 2 tokens like Optimism and MATIC. So, the next section will take a look at Optimism price and what to expect from it.

Also read: Here are top three altcoin categories that are likely to pump the hardest in the 2023 alt season

Optimism price ready to explode

Optimism price is attempting to overcome a hurdle around $2.73 and is looking primed for a breakout. A decisive close above $2.73 is likely to open up a path for OP to rally to the next hurdle at the 61.8% Fibonacci retracement level at $3.21, which is where the altcoin formed a local top in February 2023.

Overcoming this level would propel Optimism price to the next critical level at $4.11. In total, this move would constitute a 51% gain from the current position at $2.70. 

OP/USDT 1-day chart

A daily candlestick close below the $2.18 level will create a lower low and invalidate the bullish thesis for Optimism price. In such a case, OP could slide lower and tag the $1.76 support floor.