Optimism: Why the protocol’s latest unlock may not favor OP’s growth
- Optimism’s token unlock could pose challenges to the potential growth of the protocol going forward.
- Network growth and velocity of the OP token fall, along with price, raising concerns.
Within the realm of layer 2 solutions, the Optimism[OP] protocol has been experiencing a remarkable streak, with a substantial surge in overall activity witnessed in recent months. This surge brought increased attention and recognition to Optimism’s capabilities and potential within the ecosystem.
Is your portfolio green? Check out the Optimism Profit Calculator
Unlocking the mystery
In addition to the aforementioned information, the OP token also observed significant interest. However, the growth of the token could soon be hindered by its upcoming unlock. According to token unlock’s data, Optimism will unlock 24.16 million OP ($35.03 million) in the coming months.
This excessive supply of OP tokens in the market could stagnate the growth of the OP price going forward. At press time, the OP token was trading at $1.439. The price of the token declined after hitting the $1.839 resistance level, however, a significant bearish trend wasn’t established.
The indicators were not in favor of OP as well. Its Relative Strength Index (RSI) was at 36.35 indicating that the momentum was with the bears at the time of writing. The Chaikin Money Flow (CMF) also signaled a bearish future at -0.11, implying that the money flow was with the sellers.
How are holders holding up
The Market Value to Realized Value (MVRV) ratio of Optimism indicated that most addresses holding the OP token were not profitable. This indicated that the selling pressure on the holders was relatively low. The long/short difference was also very negative indicating that a lot of short-term addresses had started to accumulate OP.
The dominance of short-term holders could affect OP’s price negatively in the future. If OP’s price were to see an uptick, short-term holders would be tempted to sell their holdings for a quick profit. Thereby, long-term HODLers could be affected.
The velocity of the OP token also fell significantly during this period. A decline in these areas suggested that the frequency with which traders were sending and receiving OP had declined. Additionally, the network growth of the OP token also fell, implying that new addresses had started to lose interest in the token.
Realistic or not, here’s OP’s market cap in BTC’s terms
However, despite all of these factors, the rising number of OP token holders acted as a silver lining for the Optimism protocol.