During the last few weeks, Arbitrum [ARB] has witnessed a consistent decrease in value, tumbling from its peak of $0.95 to $0.58, eventually settling at $0.63 at the time of reporting. This showcases a 3.47% decline based on daily charts.
The prevailing market conditions have instilled concerns within the crypto community regarding a potential market crash, leading to diminishing profitability for investors.
Decline in Holder Profitability: A Historic Low
As per data from IntoTheBlock, Arbitrum has recorded the most significant decline in profitability among investors, with the majority of holders facing losses.
At the current price level, merely 7% of ARB holders are witnessing profits, indicating that 89% are experiencing losses, while only 4% are breaking even.
During this phase, long-term holders have been gradually exiting the market. Currently, only 40% of ARB holders seem to have retained the altcoin for over a year.
When confronted with a vast number of holders incurring losses, two potential scenarios emerge. The first being a ‘final flush,’ where another decline might transpire before a reversal takes shape.
The second scenario hints at a probable bottom signal. In this case, substantial holders cease selling as weak holders leave the market, potentially leading to a trend reversal.
Projections for the Future of ARB
Based on CryptoCrypto’s analysis, Arbitrum is under significant downward pressure currently, with bears dictating the market sentiment.
This downward pressure is evident through ARB’s Advance Decline Ratio (ADR), which has fallen below 1.
Further examination reveals that Arbitrum’s active users and adoption rates have markedly decreased. The NVT Ratio (in conjunction with transaction volume) has surged to 201 from its previous low of 29.46.
This indicates a decline in transaction volume and active users concerning market cap.
Hence, notwithstanding the existing price level, there is a possibility of further decrease to align with the actual demand.
Moreover, Arbitrum’s MVRV Ratio has plummeted sharply to -5.01. A negative MVRV signals capitulation, indicating holders selling at a loss.
This indicates a period of significant fear and forced liquidations within the market.
Despite the prevailing bearish sentiment, ARB’s value could potentially drop to $0.56. Nevertheless, the negative shift in the MVRV Ratio offers a glimpse of hope for a potential reversal. Should a reversal materialize, the altcoin might reclaim $0.74.