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Arbitrum (ARB) Poised for Gains, but Timing May Be Delayed

2 mins
Updated by Ryan James
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In Brief

  • Arbitrum (ARB) is currently trading above its 20-day exponential moving average (EMA).
  • This is generally referred to as a bullish sign and an indicator of rising buying pressure.
  • However, other key indicators show that bearish influence is still significant in the ARB market.
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During the trading session on May 28, Arbitrum (ARB) bulls took control, propelling the Layer 2 (L2) token’s price above its critical 20-day exponential moving average (EMA).

While this often suggests a potential shift toward an upward trend, assessing other key technical indicators showed that the uptrend might materialize slower than anticipated.

Arbitrum Distribution Remains Higher Than Its Accumulation 

Arbitrum’s Relative Strength Index (RSI) rested below its 50-neutral zone at press time. This indicator measures the momentum of an asset’s price movement.

When it returns a value above 70, it indicates that the asset might be overbought. Conversely, an RSI value below 30 suggests the asset might be oversold, potentially signaling a buying opportunity.

At 44.50 at press time, the indicator suggested although ARB traded above a key moving average, its sell-offs still outpaced its accumulation. 

Arbitrum Analysis. Source: TradingView
Arbitrum Analysis. Source: TradingView

Confirming the rise in selling pressure, ARB’s Chaikin Money Flow (CMF) returned a negative value of -0.09 as of this writing. 

This indicator assesses buying and selling pressure in an asset’s price movement. When it returns a value above zero, it indicates that more money flows into the asset on up days, suggesting potential accumulation by investors. 

Read More: What Is Arbitrum?

Arbitrum Analysis
Arbitrum Analysis. Source: TradingView

Conversely, a negative CMF value suggests that more money is flowing out on down days, potentially signaling investor distribution. A negative CMF is often taken as a cue to exit long positions and occupy short positions, a move known to put downward pressure on an asset’s price. 

ARB Price Prediction: Futures Traders Are Moving Differently

The decline in ARB’s daily active addresses makes a downward correction in its price more likely. On-chain data assessed using a seven-day moving average showed that in the last week, the number of daily addresses executing ARB transactions has dropped by almost 10%.

Arbitrum Daily Active Addresses. Source: Santiment
Arbitrum Daily Active Addresses. Source: Santiment

Interestingly, despite the significant bearish sentiment in the ARB market, its futures traders have maintained a bullish outlook. The token’s funding rate across cryptocurrency exchanges has remained positive. 

Funding rates are used in perpetual futures contracts to ensure the contract price stays close to the spot price. 

When an asset’s funding rate is positive, it suggests that there is a stronger demand for long positions in its perpetual futures contract than for short positions. This is a bullish sign, as it means that more traders are accumulating in anticipation of a price rally.

If this pushes up demand for ARB, it may continue to trade above its 20-day EMA and exchange hands at $1.2.

Read More: Arbitrum (ARB) Price Prediction 2024/2025/2035

Arbitrum Daily Active Address
Arbitrum Analysis. Source: TradingView

However, if the bears retain market control and put more pressure on its price, ARB’s value may drop to $1.11.

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Disclaimer

In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

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Abiodun Oladokun
Abiodun Oladokun is a seasoned cryptocurrency research journalist with a diverse skill set spanning blockchain analysis, technical research, and content creation. He was a prominent figure at AMBCrypto, where he played a pivotal role in conducting market analysis and technical assessments of various cryptocurrencies and digital assets. His proficiency in utilizing on-chain analytics tools, such as Messari, Santiment, DefiLlama, and Dune Analytics, enabled him to gather and analyze on-chain...
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