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OP Price Risks Breakdown Even With Layer-3 Announcement but Optimism Leads Weekly Bridge Net Inflows

Last Updated May 9, 2024 10:57 AM
Valdrin Tahiri
Last Updated May 9, 2024 10:57 AM
By Valdrin Tahiri
Verified by Peter Henn

Key Takeaways

  • Optimism has led the total bridge net inflows during the past seven days, surpassing Ethereum.
  • The platform’s team announced their support for Layer-3 solutions building on top of the OP stack.
  • The OP price risks breaking down from an ascending parallel channel that has existed for 26 days.

The OP price has corrected since March 6, at one point experiencing a drawdown of 64%. While the price bounced on April 13, it failed to break out from its main resistance. Also, a corrective pattern contains the increase, posing a breakdown risk for OP.

Will OP break down from this pattern, and if so, what implications will this have for the longer-term price movement?

Optimism Welcomes Layer-3 Builders

Numerous chains built on the OP stack create the Optimism Superchain, which shares security, bridging, and upgrades, among other features. For example, Coinbase’s Layer-2 blockchain, Base, builds on the OP stack.

The Superchain launched  in March 2024 and is intended to provide further scalability improvement and allow developers to build applications targeting the Superchain as a whole, rather than focusing on specific intricacies of individual chains.

Superchain Structure
Optimism Superchain | Credit: Optimism Docs

On May 8, Optimism announced they are inviting Layer-3 solutions to their Superchain. Layer-3 solutions build decentralized applications (dApps) on top of Layer-2 chains.

Joining the Superchain will give them various benefits such as access to a broad network of Superchain builders, and eligibilities for different growth campaigns and airdrops.

Additionally, two new features  will deploy in support of Layer-3 builders, namely custom gas tokens and Plasma mode

Custom gas tokens will allow a Layer-3 to use a Layer-2 token for gas. This aims to reduce onboarding costs for new users, since it negates the need to use the expensive Layer-1 transaction to deposit gas tokens.

Plasma mode aims to reduce overhead costs of operating a Layer-3 by requiring them to submit transactions only to Optimism instead of the Layer-1, which in this case is Ethereum. In the beginning of May, Redstone  launched as the first OP stack chain with plasma mode.

Optimism Leads Bridge Net Inflows

One of the main ways in which the Superchain helps Optimism is by making bridging easier. Bridge net inflows  illustrate this positive effect. In the past seven days, Optimism has the highest bridge net inflows at $91 million, followed by Ethereum at $42.8 million and Polygon at $38 million.

More specifically, Optimism deposits were $211 million while withdrawals were $120 million. The vast majority of the tokens deposited are Wrapped Ethereum (WETH) at 67%, followed by USDC at 10%.

Optimism Bridge Tokens
Optimism Token Deposits | Credit: DeFiLlama

The bridges with the most activity are Stargate, the Optimism Gateway and Across . Stargate is an independent bridge, Across is a similar bridge built on top of the OP stack, while Optimism Gateway is the native bridge for the OP Mainnet.

Optimism Bridged Value
Optimism Bridge Stats | Credit: Dune

In the past seven days, Optimism has had 438 unique bridge depositors, with more than 7,000 ETH bridged. Nearly 350,000 depositors have bridged a total value of 760,000 in the longer-term.

OP Price Risks Breakdown From Channel

The daily time frame chart shows that OP has increased inside an ascending parallel channel since bouncing on April 13. These channels usually contain corrective movements, meaning that an eventual breakdown from it is likely.

To support this, OP trades very close to the channel’s support trend line, after its resistance rejected it on May 6 (red icon). The rejection also coincided with the $2.85 horizontal resistance area. The area had previously provided support for 112 days before the breakdown on April 12. Now, it is providing resistance.

OP Price Channel Breakdown
OP/USDT Daily Chart | Credit: TradingView

At the same time as the rejection, the RSI fell below 50 and the MACD was rejected by 0. Both these readings align with the bearish outlook and imply a breakdown is likely. If that happens, the closest support area will be at $2.07, nearly 20% below the current price.

OP Breakdown Can Trigger a 20% Drop

Optimism has enjoyed a resurgence in its activity since the launch of the Superchain. The team aims to invite more builders for Layer-3 solutions by offering native gas tokens and plasma mode. However, the OP price risks breaking down from its 26-day corrective pattern, something that can trigger a significant decline.

 

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