ARB’s 9% fall – Here’s how it can hold its current price levels

  • Arbitrum metrics show some positive signs with rising activity.
  • Despite these factors, the price of ARB continued to fall significantly.

Arbitrum [ARB] witnessed an extremely positive run where the protocol outperformed its competitors in most areas.

One of the primary areas where Arbitrum excelled was activity on its network. In the last few weeks, the activity and transactions occurring on the network had grown significantly.

Some problems ahead

However, amidst the heightened activity, Total Value Locked (TVL) and decentralized exchange (DEX) volumes on Arbitrum experienced declines. This suggested potential challenges within the decentralized finance (DeFi) sector.

The declining interest in DeFi may impact user engagement and overall platform utilization going forward.

Screenshot 2024 04 25 at 6.17.43 PM

Source: token terminal

Coupled with that the price of ARB witnessed a sharp decline, plummeting by 8.91% within a 24-hour period. This significant drop raises concerns about investor sentiment and market confidence in ARB.

The number of liquidations also grew due to this surge in price causing a shift in market sentiment. Trader sentiment surrounding ARB appeared predominantly bearish, with the percentage of short positions increasing to 53%.

The sentiment shift reflects a lack of confidence in ARB’s short-term prospects and may exacerbate selling pressure on the token, further influencing its price dynamics.

Screenshot 2024 04 25 at 4.49.48 PM 1Screenshot 2024 04 25 at 4.49.48 PM 1

Source: Coinglass

Looking at the data

An analysis of Santiment’s data by AMBCrypto revealed a significant decrease in network growth for ARB. This decline indicated a potential reduction in interest showed by new addresses.

If interest from new addresses continues to decline, it may further impact the price of ARB negatively. Additionally, the slowed velocity of ARB transactions suggests decreased trading activity within the network.

This can impact overall liquidity for ARB and can cause more problems for the token in the future.

Arbitrum ARB 18.16.45 25 Apr 2024Arbitrum ARB 18.16.45 25 Apr 2024

Source: Santiment

The MVRV ratio for ARB declined, reflecting diminishing profitability for holders. This suggested that the selling pressure for existing holders had reduced as most of them didn’t have much of an incentive to liquidate their holdings.

Realistic or not, here’s ARB’s market cap in BTC’s terms

Despite the decline in price, the Long/Short difference remained high, indicating a significant presence of long-term holders who are less inclined to sell their positions.

These factors may help ARB in retaining the current price levels and help the token in absorbing some selling pressure.

Arbitrum ARB 18.16.24 25 Apr 2024Arbitrum ARB 18.16.24 25 Apr 2024

Source: Santiment


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