- Optimism price has dropped from the highest level this month.
- A token unlock of over $35 million OP tokens will take place this week.
- The total value locked (TVL) of the DeFi ecosystem has retreated.
Optimism crypto price has come under pressure this week as cryptocurrencies have retreated. The OP token retreated to a low of $1.43, the lowest level since July 19th. It has retreated by more than 10% from its highest level this year.
Optimism token unlocks ahead
Optimism price has retreated in the past few days for three main reasons. First, this price action is in line with the performance of other cryptocurrencies like Bitcoin and Ethereum. BTC has retreated to $29,000 while Ethereum is stuck at $1,800. Historically, cryptocurrency prices tend to have a close correlation with each other.
Second, OP price has struggled because of the upcoming token unlock. Data compiled by Token Unlocks shows that tokens worth over $35 million will be unlocked in the next three days. These tokens are equivalent to 3.5% of the total market cap of OP.
Read more: How to buy Ethereum.
Token unlocks are an important part of many proof-of-stake cryptocurrencies. They happen when tokens are released as part of the vesting schedule. In the case of Optimism, there are now over 702 million of unlocked tokens while 1.14 billion have been locked. Those untracked ones are over 2.46 billion, representing 57% of all tokens. The vesting process will continue until 2027.
Historically, cryptocurrency tokens tend to decline ahead of a major token unlock event since they usually lead to dilution. This also explains why tokens like dYdX, Acala, and Aptos have retreated recently since they also have upcoming unlocks.
Third, there are signs that the ecosystem is not doing all that well. Optimism has over $1.25 billion in total value locked (TVL), lower than its all-time high of over $2.67 billion. The TVL has moved sideways in the past few weeks. The number of active users of 101,995 has been muted.
Optimism price prediction
The 4H chart shows that the OP crypto price formed a triple-top pattern at $1.63. In price action analysis, this pattern is usually a bearish sign, which is another reason why it has dropped. The token has dropped below the key support at $1.50, the highest point on June 29.
It has moved slightly below the 25-period moving average. Also, Optimism price has found a strong support that is shown in black. Therefore, more downside will be confirmed if the token moves below this week’s low of $1.423.
