Arbitrum (ARB) has recently tracked the broader cryptocurrency market, experiencing a modest increase of 1.2% over the past 24 hours. At press time, ARB traded at $0.558. Despite this uptick, the altcoin has exhibited a lack of volatility over the past week, fluctuating between $0.54 and $0.57. Traders are watching closely as Arbitrum has formed an ascending triangle on its one-day chart, a pattern that often signals bullish sentiment, yet the price faces stiff resistance at $0.62.
The Current Landscape
Despite forming a series of higher lows, the upward momentum for ARB remains weak. The Relative Strength Index (RSI), currently at 47, sits below the signal line, indicating that bearish momentum is still in play. This suggests that sellers are firmly in control. Furthermore, the Chaikin Money Flow (CMF), although still positive, is trending downward, signaling that buying activity is not robust. If sellers continue to dominate, ARB could see a drop towards its support level at $0.48.
Whale transactions play a crucial role in driving price movements, and recent data from IntoTheBlock shows a significant decline in large transactions involving ARB. Weekly transactions from large addresses have plummeted from over 200 to below 50, with transaction volumes also dropping from $342 million to just $93 million. This inactivity among whales could contribute to Arbitrum’s range-bound trading, as the absence of substantial buy or sell orders limits market dynamics.
Declining DeFi Activity
Adding to Arbitrum’s woes, decentralized finance (DeFi) volumes have also seen a sharp decline. According to DeFiLlama, DeFi volumes on Arbitrum plummeted from $813 million at the start of the month to a mere $279 million. This drop in DeFi activity indicates waning network usage, which could further erode confidence in Arbitrum, potentially triggering more sell-offs.
Liquidity Heatmap Analysis
A closer look at Arbitrum’s liquidity heatmap reveals a cluster of liquidations below the current price level, indicating a bearish sentiment. With more short positions than long ones, this liquidation heatmap suggests that a price increase could induce buying pressure if short sellers are forced to close their positions. However, the prevailing bearish sentiment could dampen this potential rebound.
Also Read: PancakeSwap Launches First IFO on Arbitrum Featuring Eigenpie
According to IntoTheBlock, a staggering 91% of wallets holding ARB are currently out of the money, while only 5% are in profit. This significant number of wallets in loss territory poses a risk; if these holders fail to break even for an extended period, they may opt to close their positions to mitigate losses, further influencing the price negatively.
As Arbitrum navigates this challenging market landscape, all eyes are on the $0.62 resistance level. While the ascending triangle formation suggests a bullish trend could be on the horizon, the lack of buyer activity, declining whale transactions, and falling DeFi volumes pose significant challenges. For ARB to break through resistance, a concerted effort from buyers is essential. Until then, traders will likely continue to observe this altcoin closely, weighing its potential against the backdrop of broader market trends.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
About The Author
