The Effect Of The Bear Market On Optimism 

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The purpose of this article is to analyze Optimism during the month of July as the markets got turbulent, examining different metrics to reveal the truth.

Approach

  • As markets were getting turbulent during the month of July, in this article we would like to analyze optimism by comparing swaps performed by users on weekly basis.
  • Additionally, I took into account other metrics such as transactions made by users, active users, and transaction fees.
  • The number of transaction fees paid by users and the average transaction fees paid by users can also be seen here. 
  • Next, here we can see the different token transferred Volume and their active users , Under this case we seperated them as Stable Coins , Ethereum and OP tokens .
    • Transaction Volume and Active Users of Stable Coins
    • Ethereum Transaction Volume and Active Users
    •  The transaction volume of OP Token and active users.
  •  In addition, here I would like to mention the network performance in the crypto world during bullish and bearish markets. What was the volume of traffic on bridges? Was there a pattern in the behavior of the users can be seen here. 

Cryptocurrency Market Cycle: What Is It?

During a crypto market cycle, there are peaks and lows at each stage. All financial markets go through market cycles. In time, cycles will appear and disappear naturally. A kind of wave movement can be seen in the price action of cryptocurrencies. There is a low price, it rises, it reaches a high, and then it falls again. We call this a market cycle. When we compare the crypto market to the normal stock market, we can see that crypto’s price movements are quick, but it allows cycles to be considerably very short.

As a result of this, we can see which markets are in bear or bull mode, and we can see the general explanation for them.

There are two types of markets: Bull and Bear Markets.

As the stock market’s value trend moves upward, a bull market is considered an upward trend, while a bear market is considered a downward trend. In the current economic climate, an economy that is in decline can also be referred to as bearish, and the opposite can be said of an economy that is in good standing, which is known as bullish. In comparison to the stock market, cryptocurrency is more volatile, and value swings can be seen daily. It is more common to use bull or bear market terms to describe periods of considerable price change in either direction over a longer period of time.

  • Prices are rising during a bull market, which is characterized by optimism.
  • The bear market is characterized by pessimism and falling prices.

Bull Market

When a financial product’s price rises for a long time, it is said to be in a bull market.  A bull market is characterized by a high level of optimism among investors. The term bullish is also used to describe this form of optimism. It means that someone believes prices will rise in the long run when they say they are bullish. The term “bull run” refers to a prolonged period of rising prices. There is a statue of a bull on Wall Street. As the bull stands for confidence in the (stock) market, and the hope that the prices will rise, it symbolizes the hope for a prosperous future.

Bear Market

When a financial product’s price falls sharply, it is called a bear market. It is reported on many websites that the drop is twenty percent. Pessimistic investors are generally seen during bear markets. In other words, when someone says they are bearish, they are expecting prices to fall in the future. A bull and a bear statue can be found near the stock exchange building in Frankfurt. In essence, this symbolizes a logical “fight” between bullish investors and bearish investors.

Source : Bull Vs Bear

OP Token Prices Compared With Different Metrics (Transactions, Active Wallets, Transaction Fees)

 As shown in the graph below, we can compare the number of transactions with the OP token price since June 15,2022. Comparing July 2022 with June 2022, total transactions increased and decreased when compared to August 9, 2022. The total number of transactions on August 9, 2022 and August 6, 2022 is lower than normal, whereas the total number of transactions on July 27, 2022 is higher than normal. A maximum Op Token Price of $1.99 was observed in August 4, 2022, and a minimum Op Token Price of $0.45 was observed in July 13, 2022. On July 29, 2022 and July 28, 2022, the total Op Token price was higher than usual. Moreover, we can see that July 29,2022, is the day with the highest number of transactions. 

During July 2022, we can see OP token price dropping and also the number of active users decreasing gradually. There is a sudden increase in OP token prices on July 27,2022, and the number of active wallets has also increased since then. All of this happened because of the volatility of the crypto market.

The price of the OP token and the daily transaction fees paid by users decreased during July 2022, as we can see when we compare July 2022 with the previous month, both of which decreased. Once again, from August 2022 onwards, we can see the token price increasing along with the daily transaction fees.

A total of 46.36K smart contracts were executed between July 2, 2022 and July 31, 2022. The maximum number of smart contracts executed was 2.37K on July 29, 2022, while the minimum number was 1.08K on July 3, 2022. The total number of smart contracts executed increased from 1.1K in July 2, 2022 to 1.73K on July 31, 2022. There is an increasing trend in smart contracts executed.

Based on the graph below, we can see the average transaction fees paid by users since June 15, 2022. 0.000007 was observed as a maximum average transaction fee on July 26, 2022. An increasing trend can be seen in average transaction fees.

Categories Of User Swaps

Under this session, we can see the number of swaps which are performed by user on weekly basis. In comparison to the other 3 swap categories, Swaps Category 1-10 Swaps contributes the most to the total number of users (97.69%).  In total, the lowest number of users is 1.14K (25-100 swaps), and the highest number is 234.55K (1-10 swaps).  The maximum number of users was 80.29K on W25(Jun19-25), 2022. There is an increasing trend in users. The number of users in W25(Jun19-25), 2022 is higher than usual. Due to the volatility and bear market in the crypto market in July 2022, the number of swaps performed decreased when compared to June 2022. But later, we can see that the number of swaps performed by users has been steadily increasing.  

We can see from the following graph the percentage of swaps performed by users on a weekly basis. Out of the 4 categories of swaps, the swap category 1-10 has the highest contribution (97.69%) to total users.

Graph below shows the swaps performed by user in the ‘1-10 swaps’ category on a weekly basis since Jun 2022. The total number of users in this category (1-10 swaps) between W24, 2022 and W32, 2022 was 234.55K.  The maximum number of users was 79.69K in W25, 2022. The number of users in W25, 2022 is higher than normal. The highest number of swaps were recorded in this swap category from July 19-25,2022. Later in July 2022, it came down almost seven times. Users of this category have been steadily increasing from July 2022 onwards. We can see that swaps are highly disordered here. Based on the volatility in the crypto market, we can speculate that all this is happening.

Graph below shows the swaps performed by user in the ’11-25 swaps’ category on a weekly basis since Jun 2022. Here we can see the increasing trend from July 2022 onwards. It was observed that there were 795 maximum users during W30 (Jul 24-30), 2022. 

According to the graphs, both categories ’25-100 swaps’ and ‘More than 100 swaps’ are on the rise from July 2022 onwards. Based on the weekly data we can see that the categories are showing the maximum number of swaps performed by the users during the week July 24-30,2022. 

Token Transfer Volume and Active Users 

In this section, we can see the different tokens and their transferred volume and active users who made transfers from Jun 2022 onwards . There we can see an increasing trend of transaction volume for all Stable coins . On Aug 4, 2022 we can see a sudden spike on transaction volume on all stable coins.

  • August 4, 2022 was the day when USDC reached a maximum of 1.27B. The USDC total for August 9, 2022 and August 6, 2022 is lower than normal, and the USDC total for August 4, 2022 and July 28, 2022 is higher than normal.
  • The maximum DAI was observed on August 4, 2022. August 6, 2022’s total DAI is lower than normal, while August 4, 2022’s and July 18, 2022’s are higher than normal.
  • The maximum USDT was observed on August 4, 2022, at 166.13M.  August 6, 2022’s USDT was lower than normal, and August 4, 2022 and August 7, 2022’s USDT was higher than normal.

Here is the below chart that shows daily percentages of stable coins transaction volume since June 2022. When we look at all 3 stable coins on a daily basis, USDC contributed more than 80% of transactions. 

Here is the below chart that shows the stable coin active users since June 2022. When we look at all 3 stable coins on a daily basis, USDC active users are more when we compare with the other stable coins.For all stable coins, we can see an increasing trend of active users.  

  • On July 28, 2022, USDC reached a maximum of 7.69K. On August 6, 2022, USDC was lower than normal. On June 16, 2022, USDC was higher than normal.
  • DAI of 1.82K was observed on July 15, 2022. Total DAI for August 6, 2022 and July 16, 2022 was lower than normal.
  • On August 4, 2022, USDT reached a maximum of 1.76K. In August 6, 2022, USDT was lower than normal, while in July 23, 2022, USDT was higher than normal.

 Comparing the active users in July 2022 with the previous month June 2022, they were initially decreasing. As time goes on, the number of active users is increasing.

Here from the below graph we can see the Ethereum transaction volume and active users from Jun 15, 2022. The maximum volume of 325.51K was observed on August 4, 2022. There is a decreasing trend in volume. August 6, 2022’s total volume is lower than normal and August 4, 2022’s volume is higher than normal. The maximum number of active users was 49.03K on June 27, 2022. The number of active users on June 28, 2022 was lower than normal, and on June 22, 2022 and July 15, 2022, it was higher than normal. We can see that the Ethereum transaction volume and active users are in a disordered here. Based on the volatility in the crypto market, we can speculate that all this is happening.

From the below graph we can see the OP token transaction volume and active users on Optimism since Jun 15,2022.

  • The total volume between June 15, 2022 and August 9, 2022 was 1.7B. The maximum volume was 119.12M on July 29, 2022. A trend of increasing total volume was observed in July 2022.   On June 18, 2022 and July 30, 2022, the total volume is lower than normal, and on July 18, 2022 and July 28, 2022, it is higher than normal.
  • There were 123.17K active users between June 15, 2022 and August 9, 2022. The maximum number of active users was 6.13K on July 29, 2022. It was a trend of increased Active Users in July 2022.  The number of active users on August 6, 2022 is lower than usual, while the number of active users on June 16, 2022 and July 28, 2022 is higher than usual.

Observations

  • The comparison of swaps performed on a weekly basis by users during the month of July shows that the markets were getting turbulent during the month. 
  • Comparing July 2022 with the previous month, both the OP token price and the daily transaction fee paid by users decreased in July 2022. Again, the token price and daily transaction fees will increase from August 2022 onwards.
  • According to the above analysis, on July 31, 2022, there were 1.73K smart contracts executed on Optimism, a substantial increase from 1.1K smart contracts on July 2, 2022. Smart contracts are being executed at an increasing rate.
  • According to the above analysis, Optimism has a maximum average transaction fee on July 26, 2022. In terms of average transaction fees, we can see an increasing trend. 
  • When compared to June 2022, the number of swaps performed decreased due to the volatility and bear market in the crypto market. However, we can see that the number of swaps performed by users has steadily increased over time.  
  •  Swap users have steadily increased since July 2022 for all swap categories. It is evident from this diagram that swaps are highly disordered. We can speculate why all this is happening based on the volatility of the crypto market.
  • The Stable coin transaction volume and active users on Optimism during July 2022 show an increasing trend for all stable coins. There is a sudden spike in transaction volume for all stable coins on August 4, 2022.  
  • It is clear from the above chart that Ethereum transaction volume and active users are disordered on July 2022. As a result of the volatility in the crypto market, all this is likely to be happening.
  • Last but not least, if we take a look at OP token transaction volume and active users in July 2022, they are also disordered. Considering the volatility of the crypto market, all of this seems to be happening. 
  • Hence, based on the above analysis, all of these fluctuations are happening in many metrics of optimism during July 2022 due to the current bear market situation.

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