Arbitrum (ARB) Flashes Bearish Signal After Trading Volume Drops by $600M

Key Takeaways

• Arbitrum volume has decreased from over $1 billion in December 2024 to $403 million.
• Several old ARB tokens have remained dormant, signifying a negative price outlook.
• ARB’s price trades below the Supertrend, indicating that it continues to face resistance.

ARB, the native token of the Ethereum layer-2 project Arbitrum, peaked at $2.40 roughly a year ago. However, the cryptocurrency has since dropped by 68% from that high.

This sharp decline in ARB’s price has also contributed to a noticeable decrease in trading volume compared to its value from a month ago. Will ARB price continue to decrease? Let’s find out in this analysis.

Market Interest in Arbitrum Nears New Low

On Dec. 10, 2024, Arbitrum’s trading volume was over $1 billion. Trading volume measures the level of buying and selling volume around a cryptocurrency.

Increasing price accompanied by rising volume typically indicates a bullish trend. On the other hand, when the price decreases with falling or rising volume points to significant downward pressure.

As of this writing, the volume has decreased to $403 million while ARB price trades at $0.76. Given the current condition, it is unlikely that ARB’s price might undergo an extended correction.

Another indicator with this bias is the Mean Dollar Invested Age (MDIA).  As the name implies, the MDIA tracks the average of all tokens on the blockchain weighted by the purchase price.

When the MDIA line trends downward, it indicates that previously dormant coins, particularly from older wallets, are being sent into circulation. This heightened market activity usually serves as a bullish signal.

On the flip side, when the MDIA rises , it means that several old tokens have remained stagnant which is the case with ARB. Should the metric’s reading continue to rise, ARB’s price might not experience a breakout in the short-term.

ARB Price Prediction: Rebound Unlikely

Trading at $0.76, the Supertrend indicator has climbed above ARB’s price. The Supertrend indicator determines whether a cryptocurrency is in an uptrend or downtrend.

According to the daily chart, when the green segment of the indicator is below the price, it indicates an uptrend. However, when the red region of the Supertrend is above the price, it means the cryptocurrency has faced resistance.

Furthermore, the Money Flow Index (MFI) has dropped from a peak of 76.81. The MFI is a technical indicator that gauges the level of buying or selling pressure around a cryptocurrency.

When the reading rises, it indicates an increase in buying pressure. A decline in the MFI signifies selling pressure. With the MFI at 64.28, it means that ARB’s buying volume has decreased.

If this decline continues, then ARB’s price might slide to the 0.236 Fibonacci retracement at $0.64. If selling pressure intensifies, the token could decline to $0.46.

However, ARB’s future potential might also depend on Ethereum’s (ETH) price action due to the strong correlation between both assets. Therefore, if ETH’s price jump, ARB could rebound. In that scenario, the altcoin could climb to surpass $1 again at the 0.786 Fib level.