Here’s why Optimism could crash nearly 9%

Optimism active addresses close to four month peak, OP traders reduce their holdings at unrealized losses.
OP holders have realized over $7 million in losses in July, per Santiment data.
OP could extend losses by 8.5% and collect liquidity at November 9 low of $1.379.

Optimism (OP), an Ethereum scaling token is poised for nearly 9% correction as on-chain metrics turn bearish. While the number of active addresses hit a near four month peak, per Santiment data, OP traders are realizing losses.

OP trades at $1.507 at the time of writing, early on Thursday.

Optimism on-chain metrics turn bearish

Santiment data shows that active addresses climbed to 21,661 on July 3, up from 10,257 a day before. Active addresses is a metric that is used to identify the relevance of an asset and its popularity among market participants.

The rise in Optimism active addresses shows rising on-chain activity. However, when combined with Network Realized Profit/Loss, a metric used to identify the net profit/loss of all traders on a given day.

OP traders have realized over $7 million in losses in July, per Santiment data.

Typically, OP traders shedding their asset holdings, combined with rising address activity is bearish for the scaling token. Unless OP traders capitulate, that is, distribute their token holdings at a sizable loss for a prolonged period of time, it is bearish for OP price.

Active addresses, NPL and OP price

OP could extend losses by 8.5%

OP trades at $1.509 at the time of writing. The scaling token could extend its losses by another 8.5% and drop to the Fair Value Gap at $1.379, as seen on the OP/USDT daily chart. The momentum indicator, Moving Average Convergence Divergence (MACD) supports the bearish thesis with MACD line crossing under the signal line, as seen on July 4, Thursday.

OP/USDT daily chart

A daily candlestick close above $1.739 could invalidate the bearish thesis and push OP closer to resistance at June 18 peak of $1.945.

Share: Cryptos feed

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram