Arbitrum’s native token, ARB, has emerged as the leader in the layer 2 Ethereum scaling platform sector, with a remarkable 49.49% increase in the past month. Despite the recent market volatility affecting altcoins and ARB’s price, long-term data suggests that ARB could regain its bullish momentum.
Arbitrum has outperformed other popular tokens like Optimism, Binance Coin (BNB), and Solana (SOL), which have seen respective increases of 47%, 25%, and 19% over the same period. The reasons behind ARB’s recent strength are worth exploring.
According to CoinMarketCap data, ARB’s trading volume has recently surpassed $3.3 billion, marking a 3,000% increase in just one month. Moreover, L2Beat data reveals that Arbitrum dominates Ethereum layer 2 TVL, accounting for an impressive 49.86% of the total $20.92 billion.
Additionally, 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 its current value of $2.41 billion.
Arbitrum’s layer 2 protocol boasts a diversified asset portfolio, with Ethereum (ETH) making up 30.9%, ARB tokens at 23.68%, stablecoins at 29.66%, and other assets at 15.76%.
The upcoming Ethereum Dencun upgrade, which incorporates changes proposed by EIP-4844 (Proto-Danksharding), is expected to reduce rollup transaction costs. This reduction in gas fees per transaction and improvement in network capacity will benefit end-users and enhance the operations of layer 2 solutions like Arbitrum. This upgrade is also expected to increase data availability for layer 2 roll-ups.
Despite a recent pullback in ARB’s price after reaching an all-time high of $2.11 on January 4, a bull flag pattern can be observed on the daily chart, indicating the potential continuation of the uptrend. ARB bulls will face resistance at the upper boundary of the flag, around $1.826. A breakout above this level could propel the price to $3.60, representing a 116% increase from its current level.
Technical indicators such as the 50-day exponential moving average, 100-day EMA, 200-day EMA, and RSI all point upwards, suggesting that the market conditions still favor the upside. However, bears could push the price lower, with the lower limit of the flag at $1.54 serving as the first line of defense. Additional support levels can 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 converge.
It’s important to note that this article does not provide investment advice or recommendations. Readers are advised to conduct their own research and analysis before making any investment decisions.