Arbitrum Offers High-Speed Transactions at a Low Cost
Arbitrum is an Ethereum Layer-2 (L2) scaling solution designed to provide faster transaction speeds at a much lower cost while maintaining the security level of Ethereum. Layer-2 solutions aim to enhance Ethereum’s efficiency by processing transactions and smart contracts off-chain or in a manner that reduces the load on the Ethereum mainnet. While Ethereum can handle just 14 transactions per second, Arbitrum can process up to 40,000 transactions per second. Furthermore, while Ethereum transactions cost several dollars, Arbitrum transactions cost only about two cents.
Developed by Offchain Labs, Arbitrum uses optimistic rollups to improve speed, scalability, and cost-efficiency. Notably, Arbitrum derives its security from Ethereum, which ensures the validity of off-chain computations and data availability for Arbitrum transactions.
Arbitrum supports unmodified Ethereum Virtual Machine (EVM) contracts and enables developers to deploy programs written in various languages such as Rust, C++, and more using Stylus, an upcoming feature for EVM+ equivalence. The native token of Arbitrum is ARB, which allows token holders to vote on proposals affecting the protocol, upgrades, and fund allocation. Developers can use ARB tokens to incentivize activities like liquidity provision or using dApps built on Arbitrum.
Arbitrum’s fundamentals are generally linked to the overall cryptocurrency market, which has shown positive momentum in the last 24 hours. One contributing factor to renewed optimism is the latest U.S. economic data, which has raised expectations that the Federal Reserve may pause its interest rate hikes during its September 20 meeting. Michael Green, Chief Strategist at Simplify Asset Management, Philadelphia, stated:
A range of recent economic data pointed to energy prices, particularly gasoline, as a key factor in the hotter-than-expected producer price numbers and better-than-expected retail sales. The Fed is likely finished raising rates, which alleviates concerns regarding equities.
Recent Large Sell-offs by Arbitrum Whales
Previously, Arbitrum (ARB) was trading above $1.30 (July 2023), but since then, its price has been on a decline. Despite the recent surge, the price remains within a bear market. Arbitrum’s price dropped to a new low of $0.74 on September 11, with the increased activity from Arbitrum whales being a contributing factor to this downturn.
According to crypto journalist Colin Wu, three whales recently transferred approximately 10 million ARB tokens (worth about $8 million) to Binance. The first whale sold roughly 3.8 million ARB at $0.77 per token, while the second whale offloaded around 3.65 million ARB at $0.83 per token. The third whale moved 2.8 million ARB at $0.79 per token. This apparent lack of interest from large investors may have contributed to the downward pressure on the token’s price.
Just hours after the three whales sold their ARB, blockchain analytics platform Lookonchain reported that another seven whales sold 20.41 million ARB tokens (worth around $16.05 million) for a total loss of $8.15 million. Further compounding concerns for potential investors, Arbitrum has seen a decline in network activity. Although it remains a leading Layer-2 solution, the total value locked (TVL) on its network has dropped steadily.
According to DefiLlama data, Arbitrum’s TVL now stands at $1.65 billion, reflecting a more than 35% decline over the past four months. This marks the network’s lowest TVL since March, indicating a possible loss of investor confidence, which could deter new participants from joining the network.
As a high-risk investment, Arbitrum’s price is influenced by broader market dynamics, including macroeconomic trends and central bank policies. In the coming weeks, it’s recommended that investors adopt a cautious approach.
Technical Analysis of Arbitrum (ARB)
Arbitrum (ARB) has declined more than 40% since July 17, 2023, dropping from $1.35 to a low of $0.74. Despite the recent rally, bears still dominate price action, and ARB could face more downward pressure in the coming weeks. As shown on the chart below, the price remains below the trendline, which indicates that no trend reversal is in place. Until ARB moves above this trendline, it remains in the SELL-ZONE.
Арбитр (ARB) үшін негізгі қолдау және қарсылық деңгейлері
On the chart (from May 7, 2023), important support and resistance levels have been marked to guide traders in understanding potential price movements. Currently, bears are in control, but if the price surpasses $0.90, the next resistance target could be $1. On the downside, $0.70 represents a key support level, and if broken, it would signal a potential “SELL” signal, with the next support level at $0.60.
Factors Supporting the Potential Rise of Arbitrum (ARB)
The upward potential for ARB appears limited for the rest of September 2023. However, if the price climbs above $0.90, the next resistance level could be at $1. Traders should also consider that ARB’s price is often correlated with Bitcoin. If Bitcoin rises above $28,000, ARB could see a corresponding price increase.
Indicators Suggesting a Decline for Arbitrum (ARB)
Recent data shows that Arbitrum whales sold more than 30 million ARB tokens between September 9 and 11, suggesting they lack confidence in the short-term price outlook. If this trend continues, ARB could face further price declines. Other factors influencing ARB’s price include market sentiment, regulatory changes, technological developments, and broader economic conditions. The last few weeks have been negative for ARB, and investors should continue to exercise caution as the economic landscape remains uncertain.
Сарапшылар мен сарапшылардың пікірлері
On Wednesday, the cryptocurrency market saw Bitcoin surpass $26,600, which had a positive impact on Arbitrum (ARB). However, despite the recent uptick, bears continue to control ARB’s price. Experts suggest that the large sell-offs by Arbitrum whales indicate that the price may continue to decline. Additionally, the falling activity on Arbitrum’s network and the declining TVL further signal potential challenges for ARB. As a highly volatile investment, ARB can experience significant fluctuations, presenting both risks and opportunities for investors. It is crucial to conduct thorough research, understand the risks, and invest only what you can afford to lose when considering Arbitrum (ARB) investments.
Disclaimer: Cryptocurrency investments are extremely volatile and may not be suitable for all investors. Never invest money you cannot afford to lose. The information on this site is for educational purposes and should not be interpreted as financial or investment advice.
