Due to the arrival of the Ethereum 2.0 update, many investors are depositing Ethereum to the Optimism smart contract. The deposits of ETH spiked to 40,000 coins; the highest number of coins deposited on Optimism in the past 90 days.
Apart from the continuous spike in ETH deposits, the trading volume also rose to give a good fundamental signal. The large trading volume also indicates that the current rally is due to the speculative trades and might come down when the Ethereum update rolls out.
By giving the technical analysis of the Optimism with the Elliott waves, Santiment analyst signalling that the Optimism will lose its momentum in the next corrective phase, seeing low market capitalization and volume of the asset.
Moreover, Santiment also sees one more indicator and i.e. social volume. This indicator can be analysed by seeing the number of interactions between hashtags and users as well as trends on social media like Twitter.
Both the indicators i.e. Elliott wave analysis and social media volume analysis is going against the price and trading volume of the Optimism token and making it a speculative token.
Due to the low trading activity, not all the technical indicators can be used to predict the further price action of the Optimism token, hence limiting the analysis to shorter time frames like daily and hourly. As per the current scenario, both timeframes are signalling that the OP token is in the oversold zone.