Despite a broader market slump triggered by Bitcoin‘s price drop, Arbitrum (ARB) has maintained a strong stance, continuing its path as one of the market’s top performers as of Wednesday. The Ethereum-based Layer-2 token demonstrated resilience, avoiding panic selling even amidst rumors of the SEC’s potential rejection of spot BTC exchange-traded funds (ETFs) in January.
During the New York trading session’s first hours, ARB’s price saw a 10% increase, accompanied by a 130% surge in trading volume. This indicates that investor interest in ARB tokens remains high despite Bitcoin’s decline. Additionally, Arbitrum’s Total Value Locked (TVL) reached a seven-month high of $2.439 billion, suggesting increased liquidity, popularity, and ease of use within the protocol.
While ARB’s price has recently enjoyed a 160% rise since October 2023, technical indicators hint at a possible pause, with speculation that the price could soon peak. A “U”-shaped series of price movements, indicative of a potential reversal in long-term price trends, has emerged following the remarkable price surge.
The Relative Strength Index (RSI) at a level of 81 signals that ARB has been substantially overbought lately, hinting at a possible pullback. This momentum indicator, combined with the Average Directional Index (ADX) at 35, suggests that the bullish momentum might be nearing exhaustion.
A daily candlestick closing below the support level of $1.8225 could trigger profit-taking and potentially drive the Arbitrum price down to $1.4676. In a worst-case scenario, a significant drop could force the token’s price to close below the psychological support levels of around $1.4 or even $1.2.
According to the Global In/Out of the Money (GIOM) metric, a potential price drop for Arbitrum could find support between $1.35 and $1.64, an area where approximately 131,720 addresses have previously purchased at an average price of $1.43, holding 2.77 billion ARB. If ARB’s price can close above the crucial level of $2.0272, it might invalidate the downtrend and pave the way for a move towards the $2.4 psychological level, representing a 20% increase from the current trading level.