TL;DR
- Despite the drop in value, the number of Arbitrum (ARB) whales has reached an all-time high.
- The accumulation of ARB is due to its current undervaluation, as indicated by its negative market value to realized value (MVRV) ratio.
- The persistent negative market trend could prevent a short-term price recovery.
Arbitrum (ARB), the native token of leading Layer 2 (L2) network Arbitrum, has been capturing the attention of whales in recent weeks, despite the constant drop in the altcoin’s value.
At the time of writing, ARB is trading at $0.73, which represents a decrease of almost 10% in the past 30 days.
An analysis of the ARB supply chain shows that the number of whale addresses holding between 10,000 and 10,000,000 tokens has increased since April 1.
With 10,100 addresses at the time of this report, this ARB whale pool is at its highest point since the token launched.
During last month’s price drop, these whales have continued to buy the token.
In the last 30 days, their number has grown by 4%, according to data from Santiment.
The increase in ARB whale accumulation is due to the constant drop in its value in recent weeks.
This has caused it to trade at prices lower than its historical cost, presenting a buying opportunity for those looking to trade against the market.
Readings on the token’s market value to realized value (MVRV) ratio confirm that ARB is currently undervalued.
The token’s MVRV ratio is negative when evaluated at different moving averages. Specifically, ARB’s MVRV ratios for the 90-day and 365-day moving averages are -18.63% and -42.42%, respectively.
This metric measures the relationship between the current price of an asset and the average price at which all its tokens were acquired.
When above zero, the current market value of the asset is higher than the price at which most investors purchased their shares, which is considered overvalued and increases selling pressure.
On the other hand, an MVRV ratio below zero suggests that the market value of the asset is below the average purchase price of all its circulating tokens, indicating undervaluation.
A negative MVRV ratio presents a good buying opportunity because the asset is trading at a lower price, and traders can accumulate it at that level to sell it at a higher price.
Arbitrum Price Prediction: Heading for an All-Time Low?
ARB’s downtrend continues as the altcoin has dropped an additional 6% over the past seven days. Overall demand for the L2 token continues to decline, hampering any short-term price growth.
At the time of writing, ARB’s Relative Strength Index (RSI) is trading below the neutral line of 50 at 46.44, suggesting that selling pressure is outweighing buying activity among market participants.
Furthermore, despite the increase in whale accumulation, negative sentiment continues to follow ARB.
At the time of publication, its weighted sentiment is -0.78.
This metric tracks the overall market sentiment regarding an asset.
When its value is below zero, it suggests that most social media discussions about the asset are driven by negative emotions such as fear, uncertainty, and doubt, which is often a precursor to a continued price decline.
If sentiment remains negative, ARB’s value could return to its all-time low of $0.57, which it last hit on July 5.
However, if the market sentiment turns positive, the price of the L2 token could rise to $0.99.
