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YEREVAN (CoinChapter.com) – Ethereum scaling solution Optimism (OP) surged over 160% since July 27, peaked at $2.24 early on Aug. 4, and settled just below $2 in the European session the same day. However, the token faced a substantial sell-off that could reverse the recent gains.
OP faced reversal
As mentioned, the OP rally reversed early on Thursday. However, the drawdown will likely continue into the upcoming session, based on the bearish trading volumes.
In detail, the two-hour chart below demonstrates that the trading volumes (vertical bars at the bottom) declined before OP reached its peak. Dubbed Trading Volume Divergence, the metric indicates a looming halt or reversal.
Meanwhile, on Aug. 4, the sell-off pressure intensified as traders unloaded over $911 million worth of OP into the market before the session’s close.
Also read: Optimism’s largest NFT marketplace hacked after contract update
Considering the $986 million buying volumes on July 29 and the induced price surge the same day, Traders can expect the opposite effect from the cool-off.
Traders’ optimism subsided?
Despite the unstable price action, the total value locked (TVL) has not retreated and stood at $667.5 million, with a 12% upside move in the previous 24 hours.
Further analysis revealed that two of Optimism’s top 5 platforms gained over 1000% in the previous month. For example, yield aggregator Beefy logged 1,745% in TVL, while lending protocol Aave rallied 1,118%.
What brought on the OP rally?
OP’s latest price surge followed a series of developments surrounding the Optimism protocol, which uses a technology known as rollups. The latter was created to solve Ethereum’s two most notorious issues: low transaction speed and high gas fees.
Earlier this week, OP Labs, the company behind the Optimism protocol, revealed that its planned Bedrock upgrade is about to arrive as early as Q4 2022, “and when it does, it will change the roll-up game forever.”
Also read: 3 reasons why Bitcoin price has bottomed out — expert.
Only ~500 lines of code separate Bedrock’s execution layer client from Geth. Bedrock is designed for Ethereum-equivalence: making the full stack, not just the EVM, as familiar as it can be. The EVM, JSON-RPC, traces, transaction types, and tooling: all work out of the box!
specified the Optimism protocol in a thread.
The layer-2 solution also noted that instead of a block for every new transaction, Bedrock will have a fixed block time of 2 seconds, and the “L2 gas price will be updated via an EIP-1559 mechanism.”
Also read: Shocking! Crypto projects raise $30.3B in funding during H1/2022 despite bear market.
It is unclear whether the upgrade alone propelled Optimism (OP) on a three-digit rally. However, the surge reversed on Aug 4, taking the token on a bearish course. Despite the rising selloff pressure, the Protocol’s TVL was still on the rise. Thus, the upcoming sessions will show if the bearish prediction has merit.
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