Arbitrum (ARB) has been under immense selling pressure, with its price tumbling 31.67% in the past month.
In the last 24 hours alone, the token has shed another 4.44%, signalling a worsening market outlook.
The sharp decline has placed ARB in a precarious position, with analysts warning that it could soon hit a lifetime low.
Several market dynamics, including increased selling by large holders, shorter holding periods, and a surge in transaction activity, have compounded the downward trend.
As concerns grow, investors are closely watching key support levels to gauge whether ARB can recover or if further losses are imminent.
Rising active addresses signal increased sell-offs
Blockchain data indicates that Arbitrum’s network activity has increased significantly, but this surge has not translated into bullish momentum.
Since 1 February, the number of active addresses has climbed from 224,000 to 262,000, reflecting heightened on-chain interactions. While a rise in active addresses often signals greater adoption, in ARB’s case, it is linked to increased sell-offs.
The Average Time Held of Coins Transacted, a crucial metric measuring how long holders retain their assets before selling, has plunged 79.96% in the past month.
Currently, ARB is being held for an average of just two weeks before being offloaded. This rapid turnover suggests waning confidence in the token, with many traders exiting their positions rather than holding for long-term gains.
On-chain data also shows that 12.41 million ARB tokens have changed hands in recent weeks, and this figure is expected to rise as selling pressure remains elevated.
If this trend continues, ARB could struggle to maintain key support levels, further accelerating its downward momentum.
Whale activity fuels further downside
Large investors, commonly referred to as whales, have played a significant role in ARB’s recent decline.
Data from IntoTheBlock reveals that institutional-sized holders have been offloading substantial amounts of ARB, intensifying the bearish sentiment.
Recently, transactions worth $15.2 million in ARB have been recorded, with whales leading the sell-off.
The Bull Bear Ratio, which tracks the number of large sellers versus buyers, indicates a clear imbalance, with 150 major sellers outweighing buyers over the past week.
This trend has contributed to ARB’s struggles, as heavy sell orders from whales have made it increasingly difficult for the token to stabilise.
With large investors continuing to reduce their ARB holdings, the likelihood of further declines remains high.
A failure to attract new buyers could see ARB slide below crucial support levels, exacerbating losses.
Key support levels and potential price recovery
Technical analysis suggests that ARB is at a critical juncture. If the token fails to hold above $0.4685, it risks a further drop to $0.3453, representing a 26% decline from current levels.
This would push ARB into uncharted territory, setting a new all-time low.
Should ARB reclaim the $0.4685 mark, a relief rally could emerge. A potential recovery could see the token climb back toward $0.67, offering some respite to traders.
One factor that could aid ARB’s recovery is the introduction of USDT0, a new cross-chain stablecoin from Tether, on the Arbitrum network.
Stablecoins are essential in driving liquidity and facilitating transactions, and USDT0’s presence could boost adoption.
Increased usage of Arbitrum’s infrastructure could help offset selling pressure and create a foundation for a market rebound.
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