Ethereum layer 2 scaling solution Optimism ($OP) is riding the bull run after rallying 39% in just seven days. The bulk of those gains came in the last 24 hours, after the token surged 23% to trade at $2.18.
This makes it a better performing digital asset than even the two market leaders, Bitcoin ($BTC) and Ethereum ($ETH).
Original cryptocurrency Bitcoin is up 0.6% overnight and 9.8% over the week to trade at $98,706. Its market cap is currently $1.95 billion, meaning it capitalizes more than half of the $3.45 trillion crypto market.
The $ETH token representing Optimism’s home chain, Ethereum, rallied 2.8% overnight and 7.4% over the week to hit $3,337. Ethereum is now 32% away from setting a new all-time high (ATH). Its last ATH, $4,878.26, was set on November 10, 2021.
Since the reelection of Donald Trump, the entire crypto market has been on a long rally, leading many to claim that another bull run is in sight. Bitcoin’s halving earlier this year is another contributing factor to the bullish sentiment.
A halving is a predetermined event in Bitcoin’s code where mining rewards are halved. This effectively halves the rate at which new Bitcoin is issued, creating a supply squeeze. When demand is consistent but supply is halved, basic economics dictates prices go up.
Optimism ($OP): What Does It Do? Where Is It Going?
As a Layer 2 scaling solution, Optimism sits atop the Ethereum chain (layer 1) and helps the network to verify transactions quicker to improve speed, cost and efficiency.
Optimism is named after Optimistic rollups. Rollups are a type of scaling solution that “rolls” multiple transactions together. The final transaction is presented to the blockchain as a single transaction.
Now, “Optimistic rollups” assume all the rolled-up transactions are valid to speed things up. To protect against error and fraud, users can contest transactions by flagging them. These are then submitted directly to the Ethereum network to check its legitimacy and settle the dispute.
Optimism’s rally appears to be cooling down now, as the token’s falling relative strength index of 67 suggests.
Holders will be hoping new support forms around the psychologically significant $2 mark. Should that happen, the token will be in a good position to rally, although, according to the chart, resistance could form around the $2.40 mark.
Still, if we are at the start of a new bull run, Optimism will benefit greatly from the market-wide rallies, especially those led by Ethereum.
As Optimism Rides Bull Run, Investors Bundle Into Crypto All-Stars in ICO’s Final 30 Days!
Optimism is one of Ethereum’s most promising Layer 2s. This makes it an important bet for many investors, because Layer 2s are helping Ethereum (the most commercially important blockchain) to achieve a world-class service. If global adoption is where Ethereum is headed, then Layer 2 technology is essentially the motor driving it.
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