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Arbitrum’s ($ARB) price has plummeted by over 30% in the past 24 hours. This is due to its significantly positive correlation with leading assets such as Bitcoin (BTC) and Ethereum (ETH), whose values have plunged to multi-month lows within that period.
As of the writing, the Layer 2 (L2) token trades at $0.44, its lowest price ever.
Arbitrum Falls by Double Digits, Long Traders Count Their Losses
While $ARB trends downward, its daily trading volume has spiked. Totaling $589 million at press time, it has risen 151% over the past 24 hours. The opposite movements of $ARB’s price and its trading volume create a negative divergence, indicating a significant bearish bias toward the L2 token.
A surge in volume during a price decline means many investors are selling the asset, potentially due to negative news or broader market downturns. A decrease in trading volume suggests that the downtrend is not a fluke but is backed by substantial selling activity.
$ARB’s double-digit price fall in the past 24 hours has also impacted activity across its derivatives market. While its derivatives trading volume has skyrocketed by over 200% during the period in review, the 30% drop in open interest confirms that many market participants are exiting the $ARB’s futures and options market to prevent further losses.
According to Coinglass, the altcoin’s futures open interest is $109 million as of this writing, its lowest since October 2023.
Additionally, the price decline has triggered a surge in long liquidations, as traders on the wrong side of the market have been forced to close their positions. According to Coinglass data, $ARB long liquidations have reached $2.01 million at the time of writing. The last time daily long liquidations were this high was on June 7.
Read More: How to Buy Arbitrum ($ARB) and Everything You Need to Know
Long liquidations happen when traders with long positions are forced to sell their assets at a lower price to cover their losses as the price falls. This usually occurs when the asset’s price drops below a certain threshold, forcing traders who had bet on a price increase to exit the market.
$ARB Price Prediction: A Rebound in Sight?
Readings from $ARB’s key momentum indicators, the Relative Strength Index (RSI) and the Money Flow Index (MFI) suggest that a rebound might be on the horizon.
At press time, $ARB’s RSI is 15.96, while its MFI is 3.53. These values suggest that $ARB is oversold and may soon experience a positive correction.
While this may be possible, the bearish bias toward the L2 token remains significant, as evidenced by the large volume of liquidity traders continue to remove from the $ARB market.
According to $ARB’s Chaikin Money Flow (CMF), which measures how money flows in and out of its market, the market is currently weak. Below zero at -0.20, the token’s CMF signals a high capital exit. This is a known precursor to a further price decline.
Read More: Arbitrum ($ARB) Price Prediction 2024/2025/2035
This may push the token’s price further downward. However, $ARB’s price may head toward $0.99 if a rebound occurs.
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