Arbitrum Price Sheds 63% in 2024—Can ARB Staking Proposal Turn Things Around?
ARB price analysis. Image: CCN
Key Takeaways
- The Arbitrum DAO made a proposal that aims to introduce ARB staking.
- Arbitrum’s (ARB) price has fallen 63% since the start of the year.
- Will this staking proposal revive the price, or will it be too late?
On Aug. 11, the Arbitrum DAO proposed introducing ARB staking to the network.
With ARB’s price steadily declining since March and recently hitting an all-time low, the need for a resurgence is more pressing than ever.
Could this proposal be the catalyst for a price recovery, or will ARB continue to struggle? Let’s take a closer look.
What is the Arbitrum DAO’s Proposal?
The Arbitrum DAO has unveiled a proposal to introduce a new ARB staking mechanism to tackle several critical issues facing its ecosystem.
Currently, ARB faces challenges due to limited demand, which is primarily driven by governance participation and increased selling pressure from a recent token unlock that doubled the circulating supply.
With only 33% of the total ARB supply currently in circulation and an increase of about 1% per month until April 2027, the DAO is addressing concerns over ARB’s incompatibility with DeFi restaking, which results in a loss of voting power.
This has left less than 1% of ARB actively used on-chain. Additionally, the DAO is wary of potential governance attacks on its treasury, which holds over $16 million in ETH, exacerbated by declining voter participation.
The new proposal suggests creating a liquid-staked ARB (stARB) mechanism, allowing users to stake ARB while retaining voting power and benefiting from rewards in DeFi.
The DAO will oversee the distribution of stARB and assign voting power to delegates. As of Aug. 12, the proposal has received overwhelming support, with 99.7% of votes in favor.
If approved, a subsequent proposal will seek $200,000 in ARB to fund the development of this new staking mechanism.
Arbitrum Price Falls 63%
The daily chart presents a bearish trend for ARB but hints at the possibility of a future bullish reversal. Since reaching an all-time high of $2.42 on Jan. 11, ARB’s price has declined.
The price formed a lower high in March and continued to decrease at an accelerated pace. By Aug. 5, ARB hit a new all-time low of $0.43, marking a 62% drop year-to-date.
Despite this downtrend, there are emerging signs of a potential reversal. Notably, both the RSI and MACD have shown significant bullish divergences during the recent decline.
The RSI divergence occurred in oversold conditions, and since then, ARB’s price has started to rise, moving above its previous low. These indicators suggest that a bullish reversal might be on the horizon.
If ARB moves above the $0.60 area, the breakdown will be only a deviation, another sign of a potential reversal. The wave count can help determine if this will happen.
ARB Price Prediction: Reversal in the Cards?
The wave count for Arbitrum suggests a five-wave decline from its all-time high in January, aligning with the potential for a bullish trend reversal.
Currently, wave five is forming a descending wedge, signaling an ending diagonal pattern. While the price may create one slightly lower low within this structure, it is not a certainty.
A breakout above the descending resistance trend line at $0.60 would confirm that the reversal is in progress.
Also, it is unclear if the ensuing increase will be an A-B-C corrective structure or a new five-wave upward movement.
Both scenarios suggest a similar short-term outlook, but the long-term impacts would differ.
If a breakout occurs, ARB could surge towards the nearest resistance levels, between $1.20 and $1.43, corresponding to the 0.382 and 0.5 Fibonacci retracement levels.
Arbitrum Faces $2.5 Billion Token Unlock: Will ARB Price Crash Following Supply Increase?
More Than $2 Billion ARB Unlocked On March 16 — Will Arbitrum Price Dump?
