- Optimism’s 31.34M token unlock on Jan 31 increases circulating supply, raising concerns of heightened selling pressure and price drops.
- OP futures open interest rose to $250M in Jan, signaling increased trading activity but potential over leveraging risks.
- OP trades below key EMAs, with RSI near oversold levels. Support at $1.38 and resistance at $1.85 to watch for price trends.
Optimism (OP) is set to release 31.34 million previously restricted tokens on January 31. These tokens, allocated to core contributors and investors under prior fundraising terms, are a major for the Layer-2 scaling solution.
At the time of publication, on January 28, OP was trading at $1.44, up by 3.50% in the last 24 hours but down by 14.39% over the past week. This token unlock comes as a circulating supply of 1.35 billion OP and a market cap of $1.95 billion is leading to anticipation of a potential price surge.
Liquidations Show High Volatility
Recent market activity shows notable liquidations for OP traders. Long liquidations, driven by unexpected price drops, dominated throughout January. The largest occurred on January 27, when long liquidations surpassed $3.28 million.
Short liquidations remained minimal, aside from a spike on January 14 due to a sudden price reversal. The price has been trading between $1.50 and $2.00 for most of January, with increased volatility preceding the unlock.
Futures and Open Interest
Futures open interest (OI) shows trader sentiment trends. Between October 2023 and January 2025, OI moved together with OP price fluctuations.
For instance, OI peaked at $350 million as OP hit $3.80 in December 2023 but dropped sharply to $100 million following a substantial price correction. By late January 2025, OI went up again to $250 million, coinciding with OP’s partial recovery toward $3.00.
Rising OI alongside price increases suggests growing market activity. However, rapid OI growth without price support could lead to over leveraging risks, potentially leading to further liquidations.
Technical Indicators Show Bearish Momentum
OP price is below both the 50 day and 200 day exponential moving averages (EMAs), at $1.85 and $1.90, respectively. The RSI at 33.40 indicates its near the oversold levels, suggesting potential selling exhaustion. However, MACD values remain negative, with no crossover signaling a reversal.
Key support levels include $1.38, while resistance is at $1.85 and $1.90. Monitoring these levels is important to see the impact of the upcoming unlock event on price action. A break below $1.38 could test the psychological $1.20 level, while a move above $1.85 may suggest recovery.