Tuesday, February 27, 2024
The Arbitrum (ARB) price has retraced toward $1 on Monday after an unsuccessful attempt at reclaiming the $1.25 territory. On-chain analysis uncovers major drivers behind the recent price retracement. 

ARB price has struggled over the past week. With crypto whales entering a selling frenzy, here’s how the ARB price could react. 

On-chain Sleuths Spotted Arbitrum Whales Selling at a Loss

As Arbitrum price rejected the $1.20 territory, a group of large investors within the ecosystem took on a bearish disposition. On-chain transaction tracker Lookonchain spotted a giant crypto whale offloading millions of ARB. 

In a November 20 post on X (Twitter,) Lookonchain reported that the whale initially withdrew 22.55M from Binance and Gateio exchanges in April. As prices wobbled over the past week, the wallet sold the tokens at a $6 million loss between November 16 and November 20. 

Arbitrum (ARB) Whale Sell-Off, November 2023. Source: Lookonchain/X

“The giant whale has dumped all 14M $ARB ($14.84M) at ~$1.05 since Nov 16.

The whale withdrew 22.55M $ARB($27.76M) at ~$1.23 from #Binance and #Gateio in April.

And also deposited 8.44M $ARB($6.92M) to #Binance at $0.82.

The total loss is $6M.”

It is a bearish signal when crypto whales start dumping tokens on the market during a price correction. Majorly, whales are perceived as sophisticated traders with a vantage perspective of the market. Hence, it spooks retail investors into taking bearish positions when these whales begin to sell. 

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Retail Market Demand Has Started to Wane

Further confirming the bearish stance stated above, on-chain data trends show that retail demand for Arbitrum is declining. According to IntoTheBlock, the ARB tokens transacted daily have declined since November 9. 

The chart below illustrates that 7.27 million ARB tokens were traded as Arbitrum price reached a monthly peak of $1.21 on November 9. But since then, demand has dropped by a whopping 70%, with only 2.18 million tokens traded on November 19.

Arbitrum (ARB) Transaction Volume | Source: IntoTheBlock

The Transaction Volume metric tracks the total number of tokens traded on-chain within a given period. Typically, a sharp decline, as observed above, is a strong indication of declining market activity. 

In summary, while the whale’s selling activity has grabbed media headlines, on-chain trends show investor disinterest across the board. If it persists, Arbitrum could struggle to hold the $1 support level.

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ARB Price Prediction: Possible Reversal Toward $0.80

From an on-chain standpoint, bearish trading activity from Arbitrum whales and declining activity in the broader retail markets are critical factors behind ARB’s recent price decline. With these metrics still trending bearish, Arbitrum price remains at risk of further correction.  

The Global In/Out of the Money (GIOM) data, which groups the current ARB holders according to their entry prices, also confirms this prediction.

It, however, shows that the bears must break down the initial support buy wall at $1 to remain in control. As depicted below, 1,260 addresses bought 4.57 million ARB tokens at an average price of $0.98. If those investors HODL firmly, they could trigger an instant price rebound. 

But if the bears can push aside the buy-wall, the Arbitrum price will likely drop toward the $0.80 area as predicted. 

Arbitrum (ARB)  Price Prediction | GIOM data | Source: IntoTheBlock

Still, the bulls could negate the pessimistic prediction if the ARB price recovers $1.25. But, in that case, the 1,370 Arbitrum addresses that bought 4.85 million ARB at the minimum price of $1.11 could mount a resistance wall. And if they sell early, Arbitrum price will likely enter another retracement.

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