Limited Supply, High Demand: Why ARB Price Is Set for a Breakout Soon

Published by

Zameer Attar

May 9, 2024

Arbitrum (ARB), an Ethereum-based layer two (L2) scaling solution, has been in a correction phase for the past three months. Despite this, it has managed to facilitate over $12.5 billion in bridged Total Value Locked (TVL), hinting at a promising future. With a valuation of around $10 billion, this mid-cap altcoin has shown resilience, establishing a sturdy support level near $1 after a 33 percent dip last month.

Backed by respected crypto venture capital firms and a cohort of Web3 developers, Arbitrum has risen to prominence within the crypto sphere. Its ascent has been bolstered by the recent Ethereum network upgrade, known as Dencun, which has significantly reduced transaction fees for layer-two networks.

Fueling On-chain Activity

Drawing in esteemed Web3 projects such as Pendle yield, AAVE V3 lending, GMX derivatives, and Uniswap, the Arbitrum network has seen a surge in on-chain activity.

According to data from IntoTheBlock, daily transactions on the Arbitrum network have surged to approximately 2 million, a notable increase from the 1 million recorded in early March.

Supply vs. Demand Dynamics

Establishing itself as a leader in Ethereum scaling solutions, Arbitrum faces an interesting supply-demand dynamic. Currently, only a quarter of ARB’s maximum supply is in circulation, setting the stage for potential supply shortages amidst growing demand.

Renowned crypto analyst Ali Martinez has identified a bullish signal on the weekly ARB price against the U.S. dollar using the TD Sequential indicator. Martinez anticipates at least four bullish weekly candlesticks in response to this signal, indicating a potential uptick in market sentiment.

Price Targets

In the short term, ARB’s price trajectory looks bullish. Technical analysis suggests that surpassing the $1.25 mark, corresponding with the 0.618 daily Fibonacci Extension, could propel the price towards $1.5, aligning with the 1.618 Fibonacci Extension.

Do you think Arbitrum (ARB) is poised for a breakout?

Zameer Attar

Zameer is a financial analyst and writer with a particular interest in cryptocurrency markets. He has been studying cryptocurrencies and their market behavior for several years and deeply understands the factors that affect the price of cryptocurrencies. His expertise lies in his ability to use both technical and fundamental analysis to make informed predictions about the future direction of cryptocurrency prices. He has a strong understanding of market sentiment and uses this to inform his trading decisions and price predictions.