On Monday, Feb. 24, Optimism’s (OP) price fell below $1 for the first time since June 2023. This drop follows a 40% year-to-date (YTD) decline, driven by heavy selling pressure on the token of the Ethereum layer-2 project.
However, Optimism’s price jumped by 12% in the last 24 hours and somehow managed to avoid a crash to its all-time low. While it has shown resilience with its recent price action, OP faces challenges ahead as it attempts to sustain the upward momentum.
Heavy Selling Pressure Threatens OP Rally
OP’s price two days ago was $0.99. Today, it has jumped to $1.08 after the wider market rebound. Despite that, the Coins Holding Time metric shows that the altcoin is unlikely to sustain the hike.
One reason for this position is Optimism’s Coin Holding Time. Also known as the holding time of transacted coins, this metric shows if holders are adding to the selling pressure or acting otherwise.
When the metric rises, it means that most holders have refrained from selling their assets. However, according to IntoTheBlock, OP’s Coin Holding Time has dropped significantly from the peak it was on Feb. 20.
This decline signals increasing selling pressure on the token. If this trend continues, it could prevent Optimism’s price from recovering.
Looking at IntoTheBlock’s data again, one metric that aligns with this bias is the In/Out of Money Around Price (IOMAP).
The IOMAP indicator focuses on key price clusters within 15% of the current price in both directions. This helps identify critical buying and selling areas expected to act as support and resistance.
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Typically, if the cluster at a certain range is in the money, it indicates support. On the other hand, if the cluster is out of the money, it represents resistance.
However, in OP’s situation, the major resistance lies between $1.08 and $1.14. Here, a combined 80 million OP tokens are in unrealized losses.
Thus, if Optimism’s price tries to break through this point, it could face intense selling pressure. As a result, the token’s uptrend might be invalidated.
OP Price Remains at Crossroads
On the technical side of things, the daily chart shows that the Relative Strength Index (RSI) remains below the neutral. This indicates that, despite Optimism’s recent price increase, it still faces bearish momentum.
In addition to this, the Bollinger Bands (BB) is contracting, indicating low volatility. Since volatility is suppressed, the OP token might find it challenging to register a substantial move to the upside.
If this stays the same, then OP, which has fallen below the $1.26 support, might collapse to $0.79. On the contrary, if the token breaches $1.26, the uptrend might continue.
In that case, Optimism’s price might climb to $1.55. In a highly bullish scenario, the value could go as high as $2.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
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