OP Price Prediction: Drop to $1.65 is Possible

Optimistic (OP) prices are down 25% as the downtrend enters its third straight week. Further analysis of the underlying on-chain data shows that tougher times await the OP hodler.

Optimsims (OP) is one of the largest scaling solutions for Ethereum, with a market cap of over $900 million at its peak. Things took a turn for the worse on April 14 when the Hundred Finance DeFi lending protocol built on the hacked Optimism network lost $7 million.

Large institutional investors holding native OPs appear to have turned pessimistic, exiting bullish positions and turning to alternative DeFi profitable protocols.

OP investors wary of contagion effects

Since Hundred Finance was hacked on April 14, the volume of large transactions on the Optimism network has been declining. Specifically, the number of transactions over $100,000 fell 73%, from 48 transactions per day on April 15 and May 2 to 19.

OP Price and Whale Trade Volume, May 2023. Source: Santiment

This shows that institutional investors are growing concerned about the potential contagion effect spreading across the Optimism network.

Unless whale trading activity eases, OP holders should adjust to a bearish picture in the days ahead.

Whales enter a sell-off cycle

Additionally, on-chain data shows that Optimism whales are steadily reducing their OP holdings. This adds credence to the bearish outlook.

The chart below shows how crypto whales holding 1-100 million OP started selling after the hack. Since the news broke on April 15, whales have sold out 12 million tokens as of May 3.

OP price and whale wallet balance, May 2023. Source: Santiment

With a current market cap of $2.1, they sold 12 million tokens worth $25 million. That’s almost 4% of Optimism’s current market cap.

When whales start selling tokens in large quantities within a short period of time, it can send the underlying token price into a downward spiral.

If the Optimism Network fails to recapture the interest and confidence of whale investors, the downtrend could continue.

OP Price Prediction: Drop to $1.65 is Possible

IntoTheBlock Global Profit and Loss (GIOM) data suggests the OP will drop to $1.65. But the bears will have to battle the initial support line around $2. Around this price, 7,000 investors who bought 8 million tokens will try to arrest the decline.

But if the market remains bearish as expected, Optimism’s price could drop to $1.65, with more substantial support from 51 investors holding 797 million OP.

OP GIOM price distribution data, May 2023. Source: IntoTheBlock

However, the bulls can override the bearish view if the OP price can break above $2.26. But a backlash from the 58,000 addresses holding 38 million coins could be a tough challenge.

While unlikely, if the bulls can extend their selling at $2.26, OP holders could be bullish on an early rally to the $2.65 area.

board pass

According to BeinCrypto

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