The native token of Arbitrum, a layer 2 Ethereum scaling platform, known as ARB, has emerged as the leader in its sector with a remarkable 49.49% surge over the past month.
Although the recent market price action has negatively affected altcoins and the price of ARB, data from longer timeframes suggests that ARB may regain its bullish momentum.
Arbitrum has outperformed other popular tokens such as Optimism, Binance Coin (BNB), and Solana (SOL), which have seen gains of 47%, 25%, and 19% respectively over the same period. The reason behind ARB’s recent strength remains unclear.
According to CoinMarketCap, ARB’s trading volume recently surpassed $3.3 billion, marking a 3,000% increase in just one month.
Data from L2Beat reveals that Arbitrum dominates the Ethereum layer 2 total value locked (TVL), accounting for an impressive 49.86% of the total $20.92 billion.
Furthermore, data from DeFi data aggregator DefiLlama shows that Arbitrum’s TVL has been steadily increasing over the past three months, rising by over 45% from $1.66 billion in October 2023 to the current value of $2.41 billion.
The layer 2 protocol holds a diversified asset portfolio, with 30.9% in Ethereum (ETH), 23.68% in ARB tokens, 29.66% in stablecoins, and 15.76% in other assets.
The upcoming Ethereum Denunc upgrade, which incorporates changes proposed by EIP-4844 (Proto-Danksharding), is expected to reduce rollup transaction costs, resulting in reduced gas fees for end-users and improved network capacity. This upgrade is particularly expected to increase data availability for layer 2 rollups like Arbitrum.
This positive sentiment surrounding Ethereum has contributed to significant price increases for scaling solutions such as Optimism (OP) and Arbitrum.
While ARB’s price has experienced a pullback after reaching an all-time high of $2.11 on January 4, a bull flag pattern can be observed on the daily chart, indicating a potential continuation of the uptrend.
Resistance for ARB bulls lies at the upper boundary of the flag at $1.826. A daily close above this level could signal a breakout, projecting a potential uptick to $3.60, representing a 116% increase from the current price.
The market conditions still appear favorable for the upside, as indicated by the upward direction of the 50-day exponential moving average, 100-day EMA, 200-day EMA, and the relative strength index (RSI). The strength of the price at 55 suggests that the bulls still dominate the market.
On the other hand, bears may push the price lower, with the lower limit of the flag at $1.54 serving as the first line of defense. Additional support levels could be found at the psychological level of $1.40 and the major support zone between $1.17 and $1.38, where all the exponential moving averages are located.
It’s important to note that this article does not provide investment advice or recommendations. Readers should conduct their own research and analysis before making any investment or trading decisions.