OP is a blockchain built on top of the first layer of Ethereum. The Ethereum ecosystem grows with the help of optimistic rollups and the safety of the Ethereum mainnet. This shows that transactions are recorded honestly on Optimism but are encrypted on Ethereum. If you are unfamiliar with cryptocurrencies, this is the go-to guide for spending your bitcoins.
Optimism, which has a total value of more than $300 million, is one of the most important ways to grow Ethereum. It is the place where 35 protocols run. Synthetix (SNX), Uniswap (UNI), a derivatives exchange, an automated market maker (AMM), a decentralized exchange (DEX), and Velodrome are some of the most well-known (VELO).
Users can start using Optimism by adding the chain to their Metamask wallets and linking coins like ETH to the L2 ledger. On May 31, 2022, Optimism dropped OP tokens into the air. This was an event that many people were looking forward to. Because so many people took advantage of the airdrop, it slowed down the Optimism blockchain for a short time.
The Optimism Foundation is in charge of optimism. This non-government organization (NGO) works to improve the Optimism ecosystem. Its goal is to make a public good that is not controlled by a single group and is focused on making money. In this way, it’s kind of like Ethereum.
All of Optimism’s money comes from grants and gifts. Its goal is to set up a system that makes it easier to make things that are good for the public and will last for a long time. The Optimism road plan states that the company aims to have L1-governed fault proofs ready by 2024.
How Even though most people in the market were pessimistic, the price of OP has gone up by more than 200% since July.
Most people think that the price will go down right now because of this. But here’s where things get complicated: when the price goes down a little, it’s expected to go up much quicker.
When you look at OP’s daily price chart, you can’t help but notice a pattern that looks like the handle of a cup. This pattern shows that the price might keep going up.
But the relative strength index (RSI) shows that the token is in the “overbought” area. This means that the price is likely to change soon. But this won’t change how likely the cup and handle pattern is if the price doesn’t drop below the handle low. This means that even if the price drops by a little more than 25%, this scenario won’t change. A small price drop can be good for the price movement because it helps it pick up speed and keep going up.
After “The Merge,” the next step for Ethereum is “sharding.” This upgrade will make rollups, which are currently Ethereum’s preferred layer 2 solutions for scalability, even cheaper, and it will eventually increase throughput (more transactions per second) while keeping Ethereum’s security. The sharding upgrade is the next step for Ethereum after The Merge.
And because OP is the governance token for Optimism, the second most popular Ethereum Layer-2 solution, and a roll-up, it is expected that the price of OP will go up since The Merge is like a confirmation that the sharding upgrade is just a matter of time.
Conclusion
Even though this is a very good sign for the future price of OP tokens, it is important to pay attention to some warning signs.
First, it’s less likely that this formation will work because the market is in a bad mood. Second, the pattern we have for the cup and handle is for a cup with a higher lip on the right, which doesn’t work as well as a cup with a higher lip on the left. Because the shape of the upper right lip cup type is different.
Lastly, developers of Ethereum could say at any time that The Merge will be delayed. Even though this wouldn’t be a big surprise, it would still make the market feel bad and pessimistic.
