Arbitrum’s (ARB) price has sharply declined by over 30% in the past 24 hours, largely due to its strong correlation with major assets like Bitcoin (BTC) and Ethereum (ETH), which have also dropped to multi-month lows.
Currently trading at $0.44, ARB has reached its lowest price ever.
ARB Faces Double-Digit Drop, Traders Feeling the Pressure
As ARB’s price falls, its daily trading volume has surged, reaching $589 million—an increase of 151% in just 24 hours. This sharp rise in volume, coupled with the price drop, creates a negative divergence that signals a strong bearish sentiment towards the Layer 2 token.
The increase in trading volume during a price decline suggests that many investors are selling off their holdings, possibly in response to negative news or a broader market downturn. A decrease in trading volume usually indicates that the downtrend is supported by significant selling activity rather than being a temporary fluctuation.
The recent double-digit decline in ARB’s price has also affected its derivatives market. Derivatives trading volume has surged by over 200% during this period, while a 30% drop in open interest shows that many traders are exiting ARB’s futures and options markets to avoid further losses.
Coinglass data indicates that ARB’s futures open interest stands at $109 million, the lowest level since October 2023.
Surge in Long Liquidations
The price drop has led to a significant increase in long liquidations, as traders who bet on price increases are forced to close their positions. According to Coinglass, long liquidations for ARB have reached $2.01 million, the highest daily figure since June 7.
Long liquidations occur when traders with long positions are compelled to sell their assets at lower prices to cover their losses as the price falls. This typically happens when the asset’s price drops below a certain level, prompting traders who anticipated a price rise to exit the market.
Potential for Rebound?
Technical indicators for ARB, such as the Relative Strength Index (RSI) and the Money Flow Index (MFI), suggest that a rebound could be on the horizon. Currently, ARB’s RSI is at 15.96, and its MFI is at 3.53, both indicating that the token may be oversold and could soon experience a positive correction.
Despite these potential signs of recovery, the bearish sentiment towards ARB remains strong. The Chaikin Money Flow (CMF), which measures capital flow in and out of the market, is currently at -0.20, indicating a significant capital exit and potentially signaling further price declines.
In the event of a rebound, ARB’s price could potentially move towards $0.99. However, the current market conditions suggest that the price might continue to face downward pressure.
