Introduction

Optimism is a fast, stable, and scalable L2 blockchain built by Ethereum developers, for Ethereum developers. Built as a minimal extension to existing Ethereum software, Optimism's EVM-equivalent architecture scales your Ethereum apps without surprises. Optimism is a scaling solution for Ethereum that can support all of Ethereum's Dapps. Instead of running all computation and data on the Ethereum network, Optimism puts all transaction data on-chain and runs computation off-chain, increasing Ethereum's transactions per second and decreasing transaction fees.

Optimism (OP) is the native token of Optimism, OP has a total supply of 4.294 billion. The OP token gives holders participation rights in The Optimism Collective, a two-tier governance system composed of Token House and Citizens’ House. Citizens’ House will come live later in 2022. Token House, which is already active, governs technical decisions related to Optimism, such as software upgrades. The Citizens’ House governs public-goods funding decisions. In its early days, Optimism itself raised funds on Gitcoin, a major public-goods funding platform.

$OP vs Other Cryptocurrencies Price Over Time

On the left chart, we can see the changing of $OP price since 1st November till today and also the movements of its different moving averages.

As we see, $OP was below almost all moving average trend lines on 9th November (one of the main days of the FTX collapse). this could not be a good situation for $OP token because the moving averages act like a resistance/protection line for the tokens’ price and when this token’s price fell sharply behind these lines, it means the situation is not good at all.

starting on 28th November, We can see an increasing trend (bullish run) of $OP price over time to the extent that the trend line of this token’s price has successfully broken all moving average resistance (while it was beneath all of them before this date) and this was one of the technical reasons behind that price climb during this time period.

In the above charts, I have charted some of the top cryptocurrencies’ prices and compared them vs $OP price during this time span to show you that $OP was not the only token that has experienced price-fall during this time period and as mentioned, the whole cryptocurrency market has experienced one of its darkest weeks in the history during early-November.

As we see, The correlation between $OP & ETH is way more than BTC and SOL and totally all of these top-rated tokens, have also experienced massive price crashes because of the FTX collapse.

In the 2 below charts, I have calculated the % price change of tokens’ price vs their price on 1st November 2022. As we see, $OP has the best situation among these tokens and is the only token (among these tokens) that has a positive % change ratio compared to its price on 1st November. On the other hand, we can see $SOL token has the worst situation and the main reason behind this heavy price crash on $SOL is because of the heavy investment of FTX & Alameda in $SOL and Solana ecosystem. BTC token has a kinda better situation than ETH but anyway, the %change of their price is still negative.

P.S: $OP has experienced a sharp raise in its price from 1st November to 5th November (almost 30% raise) while other tokens did not experience this bullish run, So, If we consider this date as our starting (comparison) timespan, we can kinda say $OP price has experienced more price drop than ETH & BTC but still has a better situation than $SOL.

Optimism Transactions and Users

In the above charts, I have analysed the activity over Optimism network since 1st November with breaking down the timespan into 3 mentioned parts and also analysed the correlation between $OP price vs transactions and active&new users on Optimism during this time period.

As we see, The number of Optimism transactions and its active users and also the failure rate of Optimism transactions have slightly increased during the FTX collapse (especially failure rate of transactions because of the market volatiles). Moreover in this timespan, we can see the least number of new-first-time Optimism users that have registered on this network.

On the other hand, We can see the highest spikes and increasing trend of number of transactions and also active and first-time users during the Recent Weeks Bullish Run timespan and this can be one of the many reasons behind the $OP slow climb during this time period.

In correlation charts, we can see $OP price has kinda the most positive correlation between the number of transactions within its network and as mentioned while the activity over this network has increased during recent weeks, $OP price has also experienced raise on its value.

And on the left charts, I have simply analysed the daily activity during these 3 time periods.

As we see, the highest number of transactions, active and also new first-time users on Optimism have been achieved during recent weeks when $OP price has experienced slow-climb in its price.

FTX collapse week is the timespan with the least number of new and also active users on Optimism but the transactions activity during this time period is slightly more than “Other Days”.

On the above charts, I have calculated the volume of transactions (tokens’ transfers volume) on Optimism over time.

The weird thing is some unusual way-high volume of transactions during 10 - 14 December 2022 with a significant difference from other days (charts are in logarithmic scale) to the extent that firstly I thought this can be because of a specific token that has incorrect values but when I have specifically checked the transactions, they seems to be true and realistic !

We can kinda say this high volume of transactions during this time period can be one another reason of many reasons behind the $OP price climb during the Recent Weeks but this can not be certain reason because for example, we have also seen some increasing high spikes of transactions volume during FTX collapse week which $OP (and many other tokens) has experienced significant crash in their price.

Anyway, in the correlation chart, we can kinda say there is almost a positive correlation between $OP price and its transactions volume but this correlation is not positive as $OP price correlation vs the number of transactions in network.

As a more clear visualization, In the left chart, we can see the significant difference between the transactions volume during recent weeks bullish run vs 2 other timespans and as mentioned, Optimism have also experienced increasing transactions volume during FTX collapse but still way lower than recent weeks.

$OP Flow To/From Centralized Exchanges (CEXs)

Basically, when a token is transferred to centralized exchanges (CEXs) it is assumed that the token is going to be sold (=price drop) and on the other hand, when a token is transferred out of CEX, it is assumed that the token is not going to be sold (=price raise) and it’s going to be held by its buyers.

Moreover, we should consider this fact that FTX is also labeled as CEX and since users were trying to withdraw their tokens from this CEX to a more safe platform or wallet, it was also considered as a outflow from CEXs in below charts.

On the above charts, We can see the highest spikes of $OP flow to/from CEXs during FTX collapse week and also recent weeks bullish run. As we see, the highest number of $OP outflows from CEXs has achieved during the recent weeks especially on 13th December with even more outflow transfers than FTX collapse week. So, this can be another reason behind the $OP price raise during this timespan. But in terms of volume, we can see the highest Inflow and also Outflow to/from CEXs during the FTX collapse and this high inflow to CEXs can be one of the main reasons behind $OP price fall during this time period. Also, we can see the average volume of $OP transfers to/from CEXs during the FTX collapse was way higher other days especially in outflows from CEXs (that can be outflow from FTX exchange because users were removing their asset from this crashed platform). In the correlation chart, we can kinda see a low positive correlation between volume of $OP transfers to/from CEXs vs its price over time especially before 28th November.

On the left charts, we can see the average daily number and also volume of $OP flow to/from CEXs during the FTX collapse weeks was way more than 2 other timespans especially in terms of volume.

$OP Swap Activity

According the above charts, The highest number, volume and average volume of $OP swaps (in both swap from and swap to) has achieved during the main days of the FTX collapse. As mentioned earlier, during this time period, whole cryptocurrency market has experienced significant volatiles and we can also see the traces of this volatile on $OP swap activitiy over this timespan. After this collapse week, as time goes on, we can see decreasing trend of $OP swaps (in both terms of volume and number) over time till 28th November but again after this date, we can almost see a slightly increasing $OP Swap activity especially during recent days. Moreover, we can see the increasing share of nummber of swaps to $OP over time (compared to the first days of the chart) but on the other hand, the volume of swaps from $OP is slightly increasing over time. But anyway, the volume of swaps to $OP has one of its highest spikes on 13th December and this means ppl were buying $OP (by swapping their other assets to $OP) and as a result, $OP price has increased slightly over this time period. but anyway, the share of swaps from $OP (selling it) is slightly more than swaps to this token and this is not good for this token. Also we can see almost positive correlation of $OP price vs the swap activity on this token especially during the FTX collapse week. Totally, Despite $OP situation in CEXs, we can say that the $OP situation in decentralized exchanges is not very good and maybe this bad situation of this token on DEXs can be one of the main reasons behind the price drop of this token.

And as a proof of bad situation of $OP token in decentralized exchanges, on the above charts, we can see the net volume of $OP swaps over time and as we see, in majority of days (especially during the FTX collapse week), the net volume of $OP swaps is negative which means that volume of swaps from $OP (selling it) is more than volume of swaps to $OP (buying it).

The right chart also shows us the evolution of net $OP swaps volume over time and as we see, it is decreasing more and more as time goes on with the decreasing ratio during the FTX collapse.

On the left charts, Firstly, we can see the highest $OP swap activity in both swap from and swap to during the FTX collapse week (market volatiles).

Also, we can see that share of swaps from $OP (in both terms of volume and number) during this time period is more than swaps to $OP (compared to the other timespans) and this can be one of the rational reasons behind sharp drop in $OP price during this time period.

On the other hand, we can see slightly more share of number and also volume of swaps to $OP during the “Recent Weeks Bullish Run” and also “Other Days” time spans compared to the FTX collapse time period and maybe this increasing share of swaps to $OP (buying it) can be one of the many reasons behind $OP price slow climb during these time periods.

Summary and Conclusion

Based on the above analysis:

• The main reason behind the $OP price fall during early-mid November was because of the whole cryptocurrency market crash due to the FTX & Alameda collapse. We have seen that several cryptocurrencies such as BTC, ETH and SOL have also experienced a massive crash in their price because of this crisis as well as $OP. But, by comparing the tokens’ price vs their value on 1st November, $OP had the best situation among these top-mentioned tokens and $SOL has the worst.
• Technically, breaking the moving averages (resistances) trend lines by the $OP price trend line can be one of the many reasons behind its raise in price during recent weeks.
• Fundamentally, the deployment of AttestationStation on Optimism and also launching of the customizable PFP NFTs on this network can be one of the many reasons behind $OP price raise during recent weeks.
• During the recent weeks (bullish run of $OP price), the Optimism network has experienced the highest number of transactions and also active & first-time users compared to the previous days and this can be one of the main reasons behind $OP price raise.
• The volume of transactions on Optimism especially during 10 - 14 December has increased incredibly.
• The share of $OP transfers from CEXs (especially in terms of number) is at one of its highest values during recent weeks and this can be one of the main reasons behind $OP price raise during this time period.
• On the other hand, during the FTX collapse, we have seen a significant increase in the volume of $OP transfers to CEXs and this can be one of the main reasons behind $OP price fall during this timespan.
• The highest number and volume $OP swap activity has achieved during the FTX collapse timespan (in both terms of swaps to (buy) and swaps from (sell)). this shows the high volatiles of market during this time period.
• The situation of $OP in decentralized exchanges is not very good (sell pressure is high especially during FTX collapse) and this can be one of the reasons behind $OP price fall.
• There is slightly more share of the number and also the volume of swaps to $OP (buy pressure) during the “Recent Weeks Bullish Run” and also “Other Days” time spans compared to the FTX collapse time period and maybe this increasing share of swaps to $OP (buying it) can be one of the many reasons behind $OP price slow climb during these time periods.

Totally, we can not actually say there is only one reason behind the price change of tokens in the cryptocurrency market. There can be several reasons behind the price drop of tokens as well as their raise such as their project and teams status, on-chain data, inflow and outflow to CEXs, inflation and interest rate, and the response of Federal Reserve (and similar organizations) in order to control inflation, technical situation of tokens’ price charts and so many other reasons.

Discord: Ali3N#8546 Twitter: Alik_110 Email: Alik110.72@Gmail.com

Methodology

In this dashboard, I am going to analyze possible reasons behind the $OP price falling during early November and also its slow climb during the days after that (till mid-December). At this timespan, I am going to check the Optimism network’s activity by analyzing the metrics such as Transactions, Active & New Users, Volume of Transactions, etc.

• So, Firstly, I am going to set my analysis’s time period from 1st November 2022 till today (16th December 2022).
• Then, I am going to first, chart the $OP price during this timespan and compare it with some other top cryptocurrencies such as BTC, ETH & SOL.
• Then, I am going to analyze Optimism’s network transactions, Transfers, and users over this time period.
• Then, I am going to analyze $OP inflow/outflow to/from centralized exchanges (CEXs) during this timespan.
• And then, I am going to analyze $OP swap activity during this timespan.

The main tables that I am going to analyze data during this time period are Flipside’s optimism.core.fact_hourly_token_prices (for price analysis and also calculating the $USD value of transfers), optimism.core.fact_transactions (for transactions analysis), optimism.core.fact_token_transfers (for transactions volume and CEXs inflow/outflow) and optimism.core.fact_event_logs (for identifying the Swap transactions).

In all steps (except the part where I have calculated the failure rate of transactions), I am going to only consider successful transactions).

• $OP Token Contract Address: '0x4200000000000000000000000000000000000042'

Moreover, In this dashboard, I am going to divide our analysis’s time period into 3 parts:

1- FTX Collapse Week: Starting From 8th November 2022 Till 14th November 2022

2- Recent Weeks Bullish Run: Starting From 28th November 2022.

3**- Other Days:** All Days Except the Above-Mentioned Timespans.

$OP Price Analysis and Possible Reasons Behind It’s Sharply Price Fall & Slow-Climb

When $OP first came onto the open market, via the first airdrop on 31 May 2022, it was worth $4.57. It seems that the price was rather optimistic, however, the market almost immediately decided it was overvalued and sent it down.

While the initial price still stands at Optimism’s all-time high (ATH), there have been some moves in the $OP token price.

FTX & Alameda Collapse

If you ask me, I would say the main reason behind that sharp price drop during early November is because of the FTX & Alameda collapse. During this time period, the whole cryptocurrency market experienced one of its darkest weeks in history because of the crash of one of the most famous and biggest centralized exchanges (based in the US), FTX to the extent that BTC price has fallen to $15,000 after this crash! many other cryptocurrencies (including $OP) have experienced a massive crash in their price and many ppl compare this market crash with the heavy market crash during May 2022 (Terra/LUNA Crash). During this dark week, the total market cap of the cryptocurrency market fell from $1.03T on 5th November to $736M on 10th November, more than 25% drop!

The bullish run was short-lived as the token fell to $0.7952 by 10 November. Throughout the remaining weeks of November, the token fluctuated between $1 and $0.8 before embarking on a steady rise in December. As of the time of writing (16 December) $OP is valued at 1.02$.

OP price drivers

On 9 December, Optimism announced that it would deploy the AttestationStation, an attestation smart contract that would provide “a permissionless, accessible data source for builders creating reputation-based applications. “By enabling anyone to make arbitrary attestations about other addresses, we can create a rich library of qualitative and quantitative data that can be used across the ecosystem,” the platform noted. 

On 15 December, the platform also added that an Optimism non-fungible token (NFT) would be “coming soon” on the AttestationStation and would be a “customizable profile picture that can represent user identity across the Optimism Ecosystem”.

Earlier on, the platform had also announced Retroactive Public Goods Funding Round 2 which would launch in February 2023 and will aim to give back to those “powering the public goods that make Optimism possible”. 

Anndy Lian, the chief digital advisor at the Mongolian Productivity Organisation and author of ‘NFT: From Zero to Hero’, said that Optimism’s intentions to launch the second round of the Retroactive Public Goods Funding are positive, which could have an effect on the future Optimism price prediction. Lian noted:“At the time of this comment [16 December 2022], $OP price has risen around 16% in the last 24 hours. The daily chart also shows bullish trends in the past 7 days. I think the coin will likely continue to build up to a target residence of around $1.30.” On 12 December 2022, Optimism held a public rehearsal for all migration to its “next major upgrade”, which will be known as Bedrock.