The cryptocurrency Optimism (OP) plunged over 23% in 24 hours, heavily underperforming the broader market. The drop was triggered by the announcement that Base, a major contributor to the OP Stack network’s activity and revenue, would be consolidating operations on its own chain. Data indicates surging sell volume and significant capital outflows, suggesting further downward pressure on OP’s price may be ahead.
The price of Optimism (OP) crashed more than 23% in a single day, far exceeding the market’s 2% decline. This sharp drop was primarily driven by the fundamental news that Base would be moving away from the OP Stack to consolidate operations on its own chain.
Base had been the main contributor to OP Stack’s revenue, so its departure represents a significant impact. Concurrently, sell volume spiked by over 157% to around $187 million, marking the highest trading volume for OP in February.
Optimism Futures Flows showed more than $7.5 million in capital leaving exchanges, a 19% loss in 12 hours. Spot traders simultaneously deposited $14.73 million into exchanges, likely for selling, while others withdrew $13.29 million, resulting in a net spot flow of $1.45 million OP.
Liquidations added to the downward pressure, with $1.28 million in long positions liquidated versus only $80,000 in shorts. The price action for OP has been in a sustained decline since the start of the year, invalidating a previous bullish pattern.
Technical analysis cited in market reports noted the price was consistently breaking market structure by making new lows. This indicator signaled a strong bear trend, suggesting more decline was coming, potentially even below $0.10.
A shift in direction would require the price to reclaim the $0.20 resistance level as support. However, the invalidation of the earlier reversal pattern suggests bullish sentiment is unlikely in the near term.
