Optimism Price Shows A Buy Signal — What’s Next For OP?
Optimism on-chain data suggest a bullish possibility, while chart analysis shows uncertainty.
Key Takeaways
- Optimism (OP) shows strong buy signals amid market optimism.
- Active OP addresses surge, indicating increased investor engagement.
- Divergence suggests OP is currently undervalued.
The Optimism (OP) cryptocurrency shows promising potential for investment as market trends and investor activities suggest a strong buy signal. Despite a rocky start to the month, a recent surge in active OP addresses, increasing by around 30% over the week, signals growing investor engagement and confidence.
This trend, coupled with a notable price-Daily Active Addresses (DAA) divergence – a scenario where an increase in user activity contrasts with declining prices – indicates that OP is currently undervalued.
Optimism Fundamentals
The number of daily active addresses rose from March 26, from a low of 13,750 to 17,870 on March 27. It remained calm during the last two days but showed an overall uptrend since the start of March when it was only 7,520.
As seen on the chart above from March 26, the price of OP declined from a high of $4 to a low of $3.60, forming a divergence between these metrics.
The vast majority of OP investors are in profit, with a total of 87.19% addressed to being in the money.
This is a bullish sign but can also be as a sign of caution, meaning that profit-taking has not yet occurred. Should the sentiment change, these investors might attempt to lock in their profits, increasing the selling pressure.
We can also see an increase in the number of transactions, indicating high on-chain activity. On March 23, there were 27.300 transactions, which grew to 52,460 on March 27.
OP Price Analysis
From October 20, 2023, when the price of OP was $1.15, we saw a new major uptrend developing. It led the price to a high of $4.80 on March 6, which could have been its completion as we saw a 38.5% downturn.
Optimism ’s price dipped below $3 on March 20 and now has two scenarios ahead. In a bearish one, we saw the end of a five-wave impulse, with a 40% drop at the start of a larger correction.
In this bearish case, the recovery until March 27 will end at a lower high of $4. And it may result in another 40% downfall to the $2.50 area.
Alternatively, the price found support on the ascending support level, which was only the end of its wave 4 correction. In this bullish count, the recovery from the March 20 low is the starting wave 5, which could potentially lead OP to a new all-time high above $7.
The determining factor between these outlooks would be what happens during the current downturn from March 27. If the price returns to the ascending support, a breakout to the downside would look more likely. However, if it continues moving above $4 again, the likelihood of it being in its wave 5 will increase.
Disclaimers
Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
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