- ARB declined by 12.32% in 30 days.
- 99% of Arbitrum holders were at a loss despite buyers attempt to reverse the trend.
Over the past three months, Arbitrum [ARB] has traded within a descending trendline. Over this period, the altcoin has experienced significant losses, dropping from a local high of $0.8 to a low of $0.34.
This downward pressure has persisted, leaving holders and investors worried. In fact, as of this writing, Arbitrum was trading at $0.38.
This marked a 12.32% decline over the past month, with a bearish trend extending on daily and weekly charts by 1.62% and 8.18% respectively.
Source: IntoTheBlock
The continued downtrend has particularly affected ARB’s holder’s profit margins. As such, according to IntoTheBlock data, 0% of ARB holders are currently in profit.
This means that 99% of holders are at a loss, while 1% are at the breakeven price.
The same phenomenon emerged a month ago when Arbitrum dropped to $0.42 but recovered soon after to reach $0.51.
With the majority of holders at a loss, it means that the current market prices are lower than the buying price. We can see this as MVRV long/short difference has dropped to extreme negative levels.
Source: Santiment
As such, long-term holder’s profit margins have dropped to hit a 3 months low of -30%. This implies that long-term holders are -30% below their initial acquisition price.
Often when long/short difference hits a negative territory, LTHs turn bearish and might decide to sell to cut losses. This decline could result in higher selling pressure if holders turn to sell as they attempt to avoid more losses.
However, historically, when an asset leaves 0% of holders in profit, it creates a buying opportunity for buyers to reenter the market.
Therefore, if the historical pattern is anything to go by, we could see Arbitrium recover after this decline as buyers reenter the market to buy the dip.
Often, when profitability declines to such levels, it signals a local bottom where buyers can enter the market helping drive prices higher.
Source: Defillama
Over the past six days, buyers have reentered the market, as evidenced by spot netflow, which have remained negative over this period, suggesting more buying activity than selling.
What next for ARB?
According to AMBCrypto’s analysis, Arbitrum was facing strong downward pressure at press time. Thus, the downward momentum was strengthening, as evidenced by the recent bearish crossover.
Source: TradingView
Over the past day, a bearish crossover has emerged on ARB’s Stoch, signaling a strong downward pressure on its prices. With this crossover emerging in a downtrend, it confirms the continuation of the current trend.
Therefore, although buyers are entering the market, they are not strong enough to overwhelm sellers. Thus, we could see Arbitrum drop to $0.35 if the trend continues.
With the altcoin signaling a local bottom, while buyers have been active over the past few days, this could signal a reversal to reclaim $0.44.
