Since Monday, the price of the Optimism (OP) token has fallen by 20%, as risk assets on international markets have plummeted. Despite the recent decline, there are signs of a comeback, with price action poised for a potential 40% recovery.
The S3 level for May continues to provide support at the stock’s current price of $1.10. But after that, there is room for a possible decline to $0.65. This may appear like a doomsday scenario, some indications indicate a recovery may be imminent.
The Relative Strength Index (RSI), one of the important indicators, currently indicates that OP is oversold. According to expert analysis, when an asset is oversold, it indicates that there has been intense selling pressure and that a price correction may be forthcoming.
Investigation revealed a psychological impact of the $1.30 level in addition to the oversold RSI. For traders, this is a crucial mark below which further selling may start. It may also offer assistance and serve as a base for recovery.
Analysts have claimed that should a rebound happen, the critical level of $1.46 would be the only thing standing in the way of OP’s swift ascent to $1.90. If this threshold is crossed, OP might recover by 40%, potentially providing investors with a return.
Long-term Pattern, Psychological Factors Linked To Optimism Latest Development
The current decline in the price of OP is a result of a longer-term pattern in the cryptocurrency market, which has been under selling pressure for the last few days. However, it was reported that the psychological support level of $1.30 and the oversold RSI might make OP more resistant to the current market conditions.
Investors who have watched the price of OP tumble to new lows for 2023 would be relieved if the stock did recover. It has been improvised that investors would suffer a substantial loss if the price fell below $0.65 because that would be a reduction of about 60% for the week.
It has been further predicted that investors will be eagerly looking to see if the oversold RSI and psychological support levels will hold in light of the promising indicators of a potential OP rebound. If it happens, it might be a turning point for OP and a chance for investors who have survived the current dip to make a profit.
Market Reacts, Optimism Investors Fixated, Expects A 40% Comeback
It was also gathered that investors and contributors possess over 386 million units of OP tokens. Analysts have advised that such development will likely double the circulating supply of the OP token, which currently stands at 335 million units as of Tuesday morning.
It was discovered that most early investors are currently gaining due to the positive trend and might decide to take out profit soon, a situation experts believe will trigger massive selling activity amongst other holders. Currently, the available liquidity on Optimism token on all the centralized and decentralized exchanges is established at $10 million.
It was also said that one $600,000 “sell order” may further pull down the price of the token by 2% on the Binance exchange. Meanwhile, the Optimism token has maintained a downward trend since February this year, moving down from its original $3 position to $1.5. This happened when major cryptocurrencies like Bitcoin and Ethereum gained around 50%.
Investors may be concerned by the recent decline in the price of optimism (OP), but there are indications that a recovery may be imminent. Both the oversold RSI and the $1.30 psychological support level are possible turning points, and if they hold, OP could experience a 40% comeback soon.
On the other hand, Wintermute: one of the Series B Optimism investors, has taken possession of 21.31 million units of OP tokens, at $1.01 per token, for $21.49 million from the Coinbase and Binance exchanges. It was gathered that Wintermute still possesses 15.3 million units of OP worth $23.23 million after releasing 27% of its holdings.
