The total value of assets locked in the Optimism Protocol (OP) fell to a 9-month low. Let’s figure out what’s going on and how a token may be affected by ETF launch on ETH
Optimism (OP), leading second level scaling solution built on the blockchain Ethereum, Faced with the outflow of capital from the network. At the moment, the total value of assets locked in the protocol (TVL) has reached its lowest level since October 2023 at $643 million.
TVL reduction in Optimism network
The TVL indicator reflects the total value of all cryptocurrencies locked in DeFi- protocols that function in the Optimism network. Its decline indicates that users are withdrawing their assets from these protocols due to a general downturn in the market or a high volatility.
Optimism’s TVL peaked at $1.05 billion on March 17th and has been falling ever since. It has fallen 18% over the past month, reflecting the overall decline in the market over the period. At the moment, the capitalization of the crypto market is $2.23 trillion, having decreased by 12% for the month.
Due to the increased outflow of liquidity from L2 solutions, the Optimism network also experienced a drop in monthly profitability. Although the network’s revenue was $2.33 million last month, it was down 9% over the past 30 days.
OP’s Prediction: What to expect with the emergence of ETFs on ETH
Due to the general downturn in the market, the price of OR has fallen by 32% in the last month. Agreed daily schedule, the altcoin continues to experience significant bear pressure. For example, its Elder-Ray index since June 6 shows only negative values. At the time of writing, the value of the indicator is -0.15.
This metric tracks the relative strength of buyers and sellers. A negative value, as in this case, indicates dominance by sellers.
However, the altcoin can make a rebound if investors’ hopes come true and Ethereum ETFs are launched on the market in July. On Monday, several spot Ethereum-ETF issuing companies sent updated filings to the SEC on Form S-1. Among them were asset managers VanEck, Grayscale, Fidelity, BlackRock, 21Shares, Franklin Templeton and Bitwise.
Po estimates of various analysts, the launch of spot ETFs on Ether could bring $3 billion to $5 billion into the industry within the first six months. This could cause the value of ETH to increase by 23-28 percent.
A positive correlation with ETH can increase the value of OP as well. As soon as the new funds start working and the demand for the second level network recovers, the next OP target will be set above $1.7.
However, if all ETF expectations are priced in and ETH does not react immediately, OP demand may continue to fall. In this case, the price may drop to $1.32.