Optimism (OP) is encountering growing signs of weakness, as a bearish technical pattern could signal a significant downturn. While the token is currently trading at $1.16, showing a 3.54% increase in the past 24 hours, there are concerning indicators suggesting that OP might be heading toward a sharp drop, with the $0.30 range potentially acting as the next major support level.

Head-and-Shoulders Pattern Signals a Reversal

OP’s chart has formed a well-defined head-and-shoulders pattern, a classic bearish reversal formation often signaling the end of a strong uptrend. The left shoulder was created in early 2023 when OP reached highs near $3.70–$3.80. The head formed between late 2023 and early 2024, with OP soaring to $4.90–$5.00. However, the price failed to break above $3.00 during the formation of the right shoulder in mid-2024, marking the onset of weakening bullish momentum.

The pattern’s crucial neckline at $1.40 was once a reliable support level, but it has now been broken, confirming the bearish trend. If this pattern continues to unfold as expected, OP’s price could potentially slide further. Analysts are now eyeing multiple downside targets, including $0.70, $0.50, and $0.38, with the most significant concern being a potential drop to the $0.28–$0.30 support zone.

Weakening Market Activity Raises Concerns

Recent data from IntoTheBlock points to a concerning decline in market engagement with OP. Although the number of new addresses (NA) has risen by 27.28%, signaling some fresh interest, the number of active addresses (AA) has dropped by 19.56%. This suggests a decline in sustained user participation and hints that new investors may not be sticking around for the long term.

Additionally, the drop in Zero Balance Addresses (ZBA) by 18.88% implies that fewer wallets are being emptied or abandoned, but it also indicates that market sentiment may not be strong enough to keep investors actively engaged. This lack of sustained activity could make it harder for OP to maintain its price stability or experience a significant recovery.

Declining Large Transactions Reflect Institutional Hesitancy

Transaction data further supports the bearish narrative, with large transactions on the OP network showing a notable decline. Over the past three months, large transactions fluctuated between 500 and 1,500 per day. However, the number of large transactions has steadily decreased, with just 367 recorded on February 12, 2025, signaling a drop in institutional participation.

This decline in large transactions could suggest a lack of confidence among institutional investors, who typically play a significant role in supporting the price of assets like OP. The reduced activity from whales and institutional investors may indicate caution, which could put additional downward pressure on the price.

Key Support Levels and Potential Price Movements

OP is currently facing critical support levels that could determine its near-term trajectory. If the token fails to maintain support at $0.70, analysts expect it to test lower levels at $0.50, $0.38, and ultimately $0.30. A break below the $1.00 level would likely accelerate this decline, as market sentiment could shift further into the bearish territory.

On the flip side, if OP can reclaim $1.40 and hold above this level, it could negate the bearish outlook, offering hope for a potential recovery. However, with the current technical and market data suggesting a continuation of the bearish trend, OP’s price may be on track for a further downward move unless significant buying pressure emerges.

Conclusion

In conclusion, Optimism (OP) faces a precarious situation, with a clear head-and-shoulders pattern signaling the potential for a substantial price drop. Weakening market activity, a slowdown in large transactions, and overall bearish sentiment in the market make it increasingly likely that OP could struggle to maintain its current levels. If the token fails to hold critical support levels, the price could slide below $0.30, marking a significant decline from its previous highs. However, should OP manage to regain the $1.40 level, it may invalidate the bearish outlook and offer a chance for recovery. The coming days will be crucial for determining the asset’s future direction.