Arbitrum [ARB] has shown a strong 23.13% increase over the past month to recover from a significant decline. However, in the last 24 hours, its momentum has slowed down, with just a modest 1.37% rise.
There is a sense of optimism in the market due to the emergence of a positive pattern. The question remains: Will ARB follow a bullish trajectory? CryptoCrypto investigates this further.
Potential Rally Forming with Falling Wedge Pattern
According to crypto analyst Alex Clay, ARB’s price action shows a falling wedge pattern, a typical bullish setup where prices consolidate in a descending manner before breaking out to the upside. Historically, this pattern has resulted in gains of up to 82.24%.
The recent breakout from this pattern suggests a possibility of further upward movement. Clay’s analysis points out three key price targets: $1.250, $1.830, and $3.650.
Additionally, the Relative Strength Index (RSI) is indicating a rounding bottom as it moves into positive territory. This indicates a favorable zone for potential continued growth in ARB’s price.
Clay expressed positivity regarding ARB’s future, stating,
“With the recovery of $ETH, I anticipate a rise in leading Layer 2 projects [such as ARB] as well.”
Influence of ETH Recovery on Arbitrum Price Movement
The price recovery of Ethereum is likely to have a significant impact on Layer 2 tokens like ARB, which rely on Ethereum’s performance for their success.
In recent times, ETH has started its recovery, attracting attention from traditional investors. Data from Sosovalue indicates a substantial inflow of $515.17 million into ETH spot ETF within a week, indicating increased investor interest in the asset.
Should ETH continue its upward trend, the positive momentum is expected to spill over to Ethereum-dependent assets like ARB. This improvement in market sentiment could act as a potent driver for ARB’s price rally.
Potential Conflicts in On-Chain Trading Activities
An observable conflict lies in on-chain trading activities associated with ARB. On one side, the Funding Rate, which monitors the market sentiment by comparing spot and futures prices, suggests that buyers (long positions) are dominating the market.
At present, the Funding Rate stands at 0.0192%, showcasing bullish sentiment that hints at the market’s likely continuation of its upward trajectory.
Conversely, a significant positive Exchange Netflow for ARB has been noticed in daily and weekly timeframes, indicating a transfer of holdings to exchanges by market participants—a move often preceding selling activities.
Over the recent week, approximately $1.95 million worth of ARB has been shifted to exchanges, with $1.44 million moved within the last 24 hours. If this trend persists, it could exert substantial downward pressure on the asset, potentially countering the current optimistic market outlook.