Arbitrum (ARB) Price Faces Bearish Pressures as Whales Sell at a Loss and Retail Demand Declines
Crypto News – The Arbitrum (ARB) price saw a retracement back to the $1 level on Monday after failing to reclaim the $1.25 territory. In-depth on-chain analysis reveals the key factors driving this recent price correction.
Over the past week, ARB’s price has faced challenges, with significant selling activity from cryptocurrency whales. Let’s delve into how these developments might impact the future of ARB’s price.
Detecting Whale Activity on the Blockchain
As the Arbitrum price faced resistance at the $1.20 mark, a group of prominent investors in the Arbitrum ecosystem turned bearish. Lookonchain, an on-chain transaction tracker, identified a substantial crypto whale selling a large quantity of ARB tokens.
In a November 20th tweet, Lookonchain disclosed that this whale had initially withdrawn 22.55 million ARB tokens from Binance and Gate.io exchanges back in April. Amidst recent price fluctuations, the whale sold these tokens at a loss of $6 million between November 16 and November 20.
“The massive whale has liquidated all 14 million $ARB ($14.84 million) at approximately $1.05 since November 16th.
The whale had withdrawn 22.55 million $ARB ($27.76 million) at around $1.23 from #Binance and #Gateio in April.
Additionally, they deposited 8.44 million $ARB ($6.92 million) to #Binance at $0.82.
The total loss amounts to $6 million.”
When crypto whales begin selling tokens during a price correction, it typically signals a bearish sentiment. Whales are often seen as experienced traders who possess insights into the market, which can spook retail investors and lead them to take bearish positions.
Declining Retail Demand
Supporting the bearish outlook, on-chain data trends show a diminishing retail demand for Arbitrum. According to IntoTheBlock, the daily transaction volume of ARB tokens has been on the decline since November 9.
The chart below illustrates that on November 9, when Arbitrum’s price peaked at $1.21 for the month, 7.27 million ARB tokens were traded. However, demand has plummeted by a staggering 70% since then, with only 2.18 million tokens traded on November 19.
The Transaction Volume metric tracks the total number of tokens traded on-chain within a specific timeframe. A sharp decline, as observed, strongly indicates reduced market activity.
In summary, while the whale’s selling spree has garnered attention, on-chain data indicates a broader lack of interest among investors. If this trend persists, Arbitrum could struggle to maintain support at the $1 level.
ARB Price Forecast: Possible Reversal Towards $0.80
From an on-chain perspective, the bearish trading activity of Arbitrum whales and declining retail market activity are significant factors contributing to ARB’s recent price decline. With these metrics continuing to exhibit bearish tendencies, the Arbitrum price remains at risk of further correction.
Global In/Out of the Money (GIOM) data, which categorizes current ARB holders based on their entry prices, supports this prediction. It suggests that bears must breach the initial support buy wall at $1 to maintain control. As depicted, 1,260 addresses acquired 4.57 million ARB tokens at an average price of $0.98. If these investors hold onto their tokens firmly, they could potentially trigger a rapid rebound in the Arbitrum price.
However, if bears manage to overcome the buy wall, the Arbitrum price may likely decline towards the $0.80 range, as previously anticipated.
Nevertheless, bullish sentiment could override this pessimistic prediction if the ARB price manages to recover to $1.25. In such a scenario, the 1,370 Arbitrum addresses that purchased 4.85 million ARB tokens at a minimum price of $1.11 could form a resistance barrier. Should they decide to sell early, it could lead to another price retracement for Arbitrum.”