The market story of Optimism (OP) has been shaped by a heavy bear cycle after its early growth rally. The network, a scaling solution in Ethereum, was at around $5 during the strong move up.
The momentum then died off, and a bearish divergence appeared at the highs. Crypto Patel highlighted on X on March 5 that the asset is already down by 97.76% from the cycle highs itself
The price pattern also shows a change from an uptrend to a downtrend after early 2024. The buyers were able to drive the price up, but the pace at which the price was moving slowed down, indicating trouble was brewing.
Shortly thereafter, the price was unable to hold above significant resistance levels and broke down structurally.
The uptrendline, which had been helping the price, also broke and then acted as resistance during the test, suggesting the sellers were in control.
Also Read: Optimism’s Revenue-Backed Strategy Could Boost OP Price and Network Activity
Accumulation Zone and Market Psychology
After its long fall, Optimism entered a descending channel on its weekly chart. This is characterized by lower tops, which are seen by small price rises being sold off again.
This is usually a sign of absorbing liquidity, where new positions are taken by long-term investors despite the bearish market sentiment.
Source: X
The price is range-bound in a demand zone on the higher timeframe from $0.075 to $0.13. This could potentially be the first level of accumulation, as the token is trading at significantly lower price points than it was valued at.
However, the charts are advising traders to be cautious as the price could dip if it closes below $0.075 on the weekly charts.
The network has strong backing from its ecosystem. The network has raised more than $425 million from large venture groups like a16z and Paradigm, and its market cap is about $270 million.
The development of the network is focused on scaling solutions for 34+ connected chains and a lot of L2 transaction volume.
Optimism Recovery Scenarios and Key Resistance Levels
For the bullish scenario to be valid, Optimism has to rise above the price of $0.3764 and close the week above this price. This price level is close to the supply areas formed after the price drop. If the price rises, momentum will eventually rise.
Several resistance points are projected using technical analysis. The first resistance point is projected to be around $0.85.
Another resistance point is projected to be around $2. Another projection for a bullish trend is that the price could go up to around $5 if people use the ecosystem.
Also Read: Optimism (OP) Breaks Descending Triangle as Technicals Hint at $2.74 Breakout