The Optimism Price Shows Signs of Recovery After Recent Correction
The Optimism (OP) price is poised for a potential comeback following a 30% correction in the past few days. While this recovery is promising, there are still obstacles that need to be overcome before it can be solidified.
Optimism Fault Proofs Test Begins
On Tuesday, OP Labs, the development firm behind Optimism, announced that fault-proof testing would commence on Ethereum’s Sepolia testnet. This marks the second iteration of fault-proof testing after it was previously deployed on the Goerli testnet last year.
Fault proofs are crucial upgrades to Optimism’s security measures. Currently, rollups rely on a “security council” for protection and cannot secure themselves. The deployment of fault proofs will address this issue and enhance decentralization.
The testnet deployment received positive feedback, as evidenced by the green candlestick on Tuesday. Additionally, the average number of transactions on the Optimism network has been increasing.
The transactions per second (TPS) have risen from 3.49 to 8.51 within a week, indicating higher activity on Optimism. This surge in activity can be attributed to the anticipation of the deployment.
Should this optimistic trend continue, it could potentially drive the price higher. Currently, investors are eagerly awaiting an increase as they hold 105 million OP worth over $364 million that became loss-bearing after the recent correction.
If Optimism’s price remains above $3.30 as a support floor, the bearish momentum will shift towards an uptrend. The Average Directional Index (ADX) is still above the 25.0 threshold, indicating a strong trend that could push the price towards $4.00.
However, a major token unlock is scheduled for March 29. Approximately 24 million OP worth nearly $80 million will be unlocked, which could potentially negatively impact the price as more supply enters the market.
If the price falls below $3.30, it could decline further to $2.82, coinciding with the 200-day Exponential Moving Average (EMA), which would invalidate the bullish thesis.
Hot Take: Optimism’s Recovery Depends on Fault Proofs
Optimism’s recent correction has created an opportunity for recovery, but its success hinges on the implementation of fault proofs and overcoming potential obstacles. Here are some key takeaways:
- The fault-proof testing on Ethereum’s Sepolia testnet is a crucial step towards enhancing Optimism’s security measures.
- The positive reception of the testnet deployment and increased transaction activity indicate growing interest in Optimism.
- Investors are eagerly awaiting a price increase to make their holdings profitable again.
- Maintaining support above $3.30 is crucial for shifting the momentum towards an uptrend.
- The upcoming token unlock event on March 29 could potentially impact Optimism’s price.
Overall, while there are challenges ahead, Optimism shows promise for a potential recovery in the near future. Investors will be closely monitoring the implementation of fault proofs and market conditions to gauge the price movement of OP.
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