2023-4-26 21:30 |
Aribitrum (ARB) price has slid 28% over the past week. But the team sparked further bearish concerns when it announced another airdrop via Twitter on Apr. 25. How will ARB price respond, with existing Arbitrum holders already sitting on 5% unrealized losses?
Arbitrum is a Layer 2 scaling solution for the Ethereum blockchain, designed to improve transaction speeds and enhance privacy by storing data off-chain. On Tuesday, Apr 25, the Arbitrum (ARB) sparked fears of another price retracement when it airdropped 113 million tokens worth nearly $120 million to reward 131 Decentralized Autonomous Organizations (DAOs) that have built early projects on the Arbitrum network.
Within the first 12 hours after the airdrops, the market appeared unmoved as the ARB price sat precariously above the $1.30 support level.
Whale DAOs Have Not Sold the Airdropped ARBAs many expected, few DAOs, including Trident, instantly sold off their tokens within an hour of the Airdrop. However, at press time, on-chain data from Loookonchain shows that none of the top 50 highest recipients of the Airdrop have sold.
The chart above shows that most of the top recipients are prominent crypto DAOs with large treasuries.
Arbitrum (ARB) Top Airdrop Recipients. April 2023. Source: LookOnChainGenerally, institutional whale DAOs are typically known to be long-term holders with unique preferences to generate passive income on their holdings rather than explore short-term profit-taking opportunities.
Furthermore, unlike retail holders who can sell at a whim, most DAOs go through a time-consuming voting process before making asset management decisions.
Going by these premises, if the top DAOs continue to HODL, ARB could avoid a price correction in the coming days.
Arbitrum is Attracting Some TractionAnother critical bullish signal for Arbitrum is the recent surge in Daily Active Addresses (DAA) interacting on the network. According to data from Santiment, daily active addresses interacting on Arbitrum have increased for 3 consecutive days.
Since the recent low of 17,687 addresses on April 21, Arbitrum has recorded an impressive 250% increase to 61,886 at the close of April 24.
Arbitrum (ARB) Price vs. Daily Active Addresses. April 2023. Source: SantimentAn increase in DAA (Daily Active Addresses) is considered a bullish signal because it indicates a growing number of users on the network. This suggests that more individuals and entities are adopting Arbitrum and projects built on it.
In addition to the HODLing DAOs, the recent surge in DAA could soon trigger higher demand and potentially a prolonged price upswing for ARB.
ARB Price Prediction: Mild-Bullish Momentum Can Trigger a Rebound Toward $1.45Looking closely at the L2 network’s current Market Value to Realized Value (MVRV) ratio, ARB price will likely rebound toward $1.50 before the bears come into play.
As things stand, most investors that bought ARB within the past month are already 5% underwater. And when MVRV declines to such milestone levels, holders will likely stop selling to avoid further losses.
If the bullish scenario plays out, ARB price could rise 10% to $1.45 before facing significant resistance. And if the bulls manage to make it past that resistance level, Arbitrum could rally toward $1.60.
Arbitrum (ARB) Price vs. MVRV Ratio. April 2023. Source: SantimentYet, the bears could still flip the narrative if the ARB price drops below $1.30. Nevertheless, investors desperate to keep their losses below the 5% range will offer support at this level.
But, should the $1.30 support level fail, Arbitrum price could further decline toward the 10% loss range at $1.23, where holders may stop selling and inadvertently trigger a rebound.
The post Arbitrum (ARB) Holds $1.30 Price Support Amid $120M Airdrop appeared first on BeInCrypto.
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