Optimism token price is at risk of a bearish breakdown

The optimism token remained caught in a deep bear market because the latest rally of most cryptocurrencies stalled.

Optimism (OP), a number one Layer-2 token, was buying and selling at $1.5140 on October 10, down 70% from this 12 months’s excessive.

One purpose optimism has retreated this 12 months is that the community continues to lose market share within the business.

It has been overtaken in key areas like decentralized finance by layer 1 networks reminiscent of Avalanche (AVAX) and Sui (SUI). It has additionally been handed on by standard layer 2 networks reminiscent of Base and Arbitrum.

The entire worth of optimism within the DeFi business has fallen to $627 million, down from the year-to-date excessive of $1.04 billion. Furthermore, the volume of stablecoins in its ecosystem has fallen from a year-to-date excessive of $1.35 billion to $1.17 billion.

Furthermore, its position within the DEX index sector has diminished weekly volume fell 24% to $503 million, whereas Sui and Base volumes rose 51% and 5% respectively over the identical interval.

OP’s worth dropped after builders revealed their fifth airdrop, unlocking 10 million OP tokens to 54 million.

There at the moment are 500 million OP tokens left for future airdrops, which means current holders can anticipate additional dilution.

Most of this dilution will happen as a result of Optimism has a circulating provide of 1.25 billion tokens, towards a most provide of 4.29 billion. Based on Defi lamathe community unlocked 49.19 million tokens in September, with the final unlock scheduled for 2026.

In the meantime, Optimism’s quantity on the futures market has additionally declined. Knowledge exhibits that open curiosity on futures fell to $104 million as of October 10, down from a year-to-date excessive of $327 million.

The optimism token is vulnerable to extra downsides

On the every day chart, the OP token has been in a powerful downtrend since its peak at $4.86 in March.

It has remained under the 50- and 100-day exponential transferring averages. Furthermore, the Relative Power Index, which measures the speed of change, factors downwards.

Optimism has additionally shaped a bearish flag sample, indicating the potential for a bearish breakout. If this occurs, help may fall and retest at $1.06, the August low.