Reasons for the Decline
Several factors have contributed to Optimism’s retreat this year:
- Loss of Market Share: Optimism has struggled to maintain its position in the market, particularly in decentralized finance (DeFi).
- Competition: Layer-1 networks such as Avalanche (AVAX) and Sui (SUI) have surpassed Optimism in key areas.
- Emerging Layer-2 Networks: Popular layer-2 networks like Base and Arbitrum have also outperformed Optimism.
DeFi Metrics Decline
Optimism’s total value locked (TVL) in the DeFi industry has seen a sharp decline:
- TVL has dropped to $627 million, down from a year-to-date high of $1.04 billion.
- Stablecoin volume in its ecosystem decreased from $1.35 billion to $1.17 billion.
- Weekly volume in the decentralized exchange (DEX) sector fell by 24% to $503 million.
In contrast, Sui’s and Base’s volume has increased by 51% and 5%, respectively, during the same period.
Impacts of Airdrops and Token Supply
The recent unveiling of the fifth airdrop, which unlocked 10 million OP tokens to 54 million holders, has contributed to the price decline. With 500 million OP tokens remaining for future airdrops, existing holders may face further dilution.
Notably, Optimism has a circulating supply of 1.25 billion tokens compared to a maximum supply of 4.29 billion. According to Defi Llama, the network unlocked 49.19 million tokens in September, with the final unlock scheduled for 2026.
Futures Market and Price Analysis
Moreover, Optimism’s volume in the futures market has also decreased:
- Futures open interest dropped to $104 million on October 10, down from a year-to-date high of $327 million.
Technical Analysis: Bearish Signals
On the daily chart, the OP token has been in a strong downtrend since peaking at $4.86 in March. Key technical indicators include:
- The price remains below the 50-day and 100-day Exponential Moving Averages (EMAs).
- The Relative Strength Index (RSI) indicates a downward trend.
- A bearish flag pattern has formed, suggesting a potential bearish breakout.
If a bearish breakout occurs, OP may retest support at $1.06, its lowest point in August.
Ecosystem
Research
News Network
About