The cost of Optimism (OP) continues to be skyrocketing forever of This summer because of its closeness to Ethereum.
Particularly, OP’s cost rallied by nearly 300% in more than a month to achieve $2.31, its second-greatest level on record, on August. 4. The token received its bullish cues mainly in the excitement surrounding Ethereum’s potential transition to proof-of-stake in September with an upgrade known as “the Merge.”
Why the “Optimism”
In conclusion: Optimism is definitely an Ethereum rollup solution. Quite simply, the so-known as layer-2 solution handles a lot of money of Ethereum’s transaction verifications off-chain to improve scalability around the primary chain.
Optimism may need the Merge because of Ethereum’s “Rollup-Centric Roadmap,” which turns its primary chain right into a settlement and knowledge availability layer and places scalability at the disposal of layer-2 rollups via “danksharding.”
“Presently, using the combined rollup and Ethereum architecture, the present Ethereum-only transaction throughput of 15–45 TPS could scale up to 1,000–4,000 TPS,” noted Ally Zach, a investigator at Messari, adding:
“The development of shards has expanded the information storage convenience of rollups to improve this throughput to [the] north of 100,000 TPS.”
That explains why OP along with other layer-2 tokens have responded positively to the Merge announcement on This summer 15.
OP cost could drop 30% in August
Despite strong fundamentals, OP’s technical metrics suggest its rally could exhaust within the coming days.
Around the four-hour chart, OP’s rising cost coincides using its falling relative strength index (RSI), indicating “bearish divergence.” Meanwhile, the attempted breakout over the $2-level has faced strong rejection two times since This summer 29, including its 15% drawdown after peaking out in your area at $2.31 on August. 4.
Therefore, a long correction might have OP test its 50-4H exponential moving average (50-4H EMA the red wave) near $1.54 since it’s interim downside target. This curvy level has limited OP’s downside attempt on August. 2.
Related: Ethereum average gas fee falls lower to $1.57, the cheapest since 2020
Furthermore, a rest underneath the 50-4H EMA could push OP to $1.36, lower 30% from August. 4’s cost. Interestingly, the $1.36-level also offered as support in August and coincides having a multi-month climbing trendline support.
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