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Optimism’s price is down 7% on Tuesday after the OP token fell from around $1.64 to $1.51. The declines come as the community braces for a supply bump that could see further downside pressure for the Ethereum layer-2 solution.
OP traded at around $1.53 at 6 am ET on Tuesday, down 6.5% in the past 24 hours and nearly 30% off in the past 30 days.
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Optimism supply to increase 100% as OP is unlocked
The downward move for OP tokens today comes as Bitcoin and Ethereum retested key price levels at $28k and $1.9k respectively. While it’s likely to mirror overall market action if BTC and ETH rally higher, the outlook for Optimism suggests the unlocking of over $580 million worth of OP could impact price.
As highlighted here, a total of 154 million OP will soon be unlocked to contributors and early investors, with this amounting to 3.6% of the total supply. Overall, Optimism’s planned unlock will see 386 million OP, worth over $580 million, enter the market as of 31 May, 2023. As a result, OP supply will jump by over 100% from the current 355 million.
As far as markets go, a large unlock such as this is likely to add to the current sell-off pressure, particularly if large holders decide to take profits.
A look at the current Optimism price shows that OP is down 52% from its all-time high of $3.22 reached on 24 February this year. However, the altcoin is still 277% up from its all-time low of $0.40 hit on 18 June, 2022.
Traders might also want to consider that Optimism has an important upgrade scheduled for 6 June 2023. Dubbed the “Bedrock Upgrade”, the hard fork is expected to significantly lower Optimism mainnet fees by at least 47%.
Could this play into price dynamics over coming weeks?
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