OP loses 40% – Here’s how post-Ethereum’s Dencun Optimism is doing
Optimism [OP], among other Layer 2 networks, benefitted immensely from the recent Dencun upgrade on the Ethereum network due to the reduction of gas fees on these networks.
Getting liquid
Over the past week, liquidity on Optimism has risen by $62 million. Higher liquidity generally leads to improved market efficiency and reduced slippage, making it more attractive for traders and investors to participate in transactions on the network. This can stimulate increased trading activity and volumes, contributing to a healthier ecosystem overall.
Additionally, the rise in liquidity may enhance the overall stability and resilience of Optimism. A deep and liquid market can help absorb large buy or sell orders without causing significant price fluctuations, promoting confidence among users and investors.
Source: Artemis
Tough competition
Even though high liquidity was seen on the Optimism network, the DEX (Decentralized Exchange Volumes) on the network continued to decline. The network wasn’t able to compete with networks such as Arbitrum and Base on this front. Due to the declining DEX volume, Optimism failed to lead in terms of TVL (Total Value Locked) as well.
New entrants in the market such as Base were able to outperform Optimism over the last few days in this regard.
Source: Artemis
State of OP
OP hasn’t been doing too well in terms of price either.
Over the past month, the price of OP has fallen by 39.27%. The price of OP showcased multiple lower lows and lower highs during this period, indicating a bearish trend. At press time, the OP token had fallen past the $3.234-level and was trading at $2.924. Moreover, the On-Balance Volume (OBV) for OP noted a decline.
A falling OBV suggests weakening buying pressure and potentially bearish sentiment among traders Additionally, a decrease in OBV could indicate a reduction in overall market demand and participation, which may further exacerbate downward price pressure.
Finally, a decline was seen in the Chaikin Money Flow (CMF) for OP as well. This decrease in CMF signifies a reduction in the flow of money into OP compared to the outflows. As CMF is a momentum oscillator that measures the strength of buying and selling pressure in the market, a falling CMF for OP indicates that selling pressure may be dominant, leading to downward price pressure.
