With the upcoming release of Ethereum 2.0, investors are depositing an extremely large number of ETH to the Optimism smart contract with deposits spiking to 40,000 coins, which is an unseen number of coins deposited to Optimism in the last 90 days.
Besides the enormous spike in deposits, Optimism saw a spike in trading volume, which is a strong fundamental sign that might show that the current rally of OP token is filled with speculative trades and we might see a rapid drop in volume after the Ethereum update rolls out.
Optimism ETH deposits roofing
avalanche rush 2.0, run it back pic.twitter.com/ZQhpUbiq96
— Will Sheehan (@wilburforce_) August 4, 2022
Santiment analysts suggested the Elliott Waves models for Optimism, which show that the asset is going to lose its momentum in the next “correction wave.” Considering the relatively low market capitalization and volume of the asset, it is not clear if the Elliot Waves price model is implementable in this case.
Social volume is another indicator used often by Santiment, and it usually reflects the number of interactions between users and hashtags and trends on social media like Twitter. Unfortunately, social volume goes against the trading volume and the price of the OP token on the market.
OP technical analysis
Because of a lack of trading history, not every technical indicator is available for the Optimism token, which is why the prediction and analysis is limited to shorter-term timeframes. As for now, both intraday and daily timeframes are showing that OP is extremely oversold, which is a no-brainer considering the 140% rally.
At press time, OP is changing hands at $1.9 and facing a 5% correction in the last two days.