Optimism is attempting to stabilize following a steep market correction that erased nearly half of its value within a short period.
The sharp decline was accompanied by an intense wave of liquidations, but recent consolidation suggests that speculative excess may have been flushed out, leaving room for more organic price discovery.
Market data now points to cautiousness on the asset as the token defends its lower range amid subdued volatility and reduced leverage exposure.
Open Interest Collapse Marks End of Leverage Cycle
On the 4-hour chart, OP has maintained a steady downtrend, printing consecutive lower highs and lows since mid-September. After holding near $0.70, the token faced a sharp breakdown, tumbling below $0.40 in what appeared to be a capitulation phase. Heavy selling volume during the crash indicated widespread liquidation events, as leveraged traders were forced to exit positions rapidly.
Source: Open Interest
Open Interest data confirms this deleveraging process, dropping from over 150 million to approximately 52 million. The steep contraction in OI illustrates that speculative positions were aggressively cleared, resetting market leverage to healthier levels. Typically, such declines in open interest signal that a majority of short-term speculators have exited, paving the way for more sustainable movement.
At present, both price and OI remain relatively stable, suggesting that the market is in a cooling phase. If buying pressure increases alongside a measured rise in open interest, it could imply a return of controlled speculation and an early phase of accumulation. However, a failure to hold support between $0.42 and $0.45 could expose the coin to further downside pressure toward $0.35, maintaining the bearish mid-term outlook.
Market Data Shows Stabilizing Fundamentals
Additionally, according to BraveNewCoin, Optimism trades at $0.42, marking a 0.48% increase over the past 24 hours, with a market capitalization of $755.56 million and daily volume of $67.9 million. The circulating supply stands at 1.77 billion tokens, positioning the token at rank 128 globally. Despite the modest rebound, the subdued volume indicates that buyers remain cautious following the market’s steep correction earlier this week.
Source: BraveNewCoin
Liquidity conditions remain consistent, suggesting that market participants are engaging primarily in short-term accumulation rather than aggressive directional trading. While volatility has eased, the coin continues to mirror the broader sentiment across Layer 2 networks, where capital flows have remained conservative amid fluctuating Bitcoin dominance.
Technical Indicators Reflect Oversold Market Conditions
At the time of writing, OP/USDT trades near $0.4237, hovering just above the lower Bollinger Band at $0.3205, with the basis line positioned at $0.5902. This proximity to the lower band signals an oversold condition, often preceding stabilization or a short-term bounce.
Meanwhile, the upper band sits near $0.8600, forming the next potential resistance target if bullish momentum builds.
Source: TradingView
The Relative Strength Index (RSI) is currently 28.58, with an RSI-based moving average at 35.32, both firmly below the neutral 50 mark. This reflects persistent bearish momentum but also hints at exhaustion among sellers. Historically, RSI levels below 30 have preceded temporary recoveries, especially when price consolidates near structural support zones.
