Arbitrum, a popular Layer 2 (L2) token, recently flashed a buy signal based on its on-chain metrics . However, further analysis of the short-term price movement of ARB suggests the possibility of further price decline.
This article will discuss ARB buy signals, crypto market sentiment , and technical indicators that can help predict ARB price movements in the near future.
ARB Buy Signal: Negative MVRV Ratio
One indicator that shows an ARB buy signal is the Market Value to Realized Value (MVRV) ratio. The MVRV ratio compares the current market price to the average purchase price of coins or tokens in circulation. When the MVRV ratio is negative, it means that the current market price is lower than the average purchase price, which indicates potential profits if you buy at that time.
At the time of writing, ARB's MVRV ratio on the 30-day and 365-day moving averages shows negative values, namely -3.51% and -31.72%. This suggests that ARB is currently trading below its historical average purchase price, making it potentially a good buying opportunity.
Negative Market Sentiment: Weighted Sentiment ARB
Market sentiment towards ARB has also shown a negative trend since April. ARB's weighted sentiment, which measures overall market sentiment, was at -0.99 at the time of writing. This negative value indicates that most market players have negative sentiment towards ARB, which can influence ARB price movements downwards.
Technical Indicators: RSI and CMF
Apart from the MVRV ratio and market sentiment, technical indicators such as the Relative Strength Index (RSI) and Chaikin Money Flow (CMF) can also provide signals about ARB price movements. RSI measures the momentum of changes in asset prices, while CMF measures capital flows into and out of asset markets.
At the time of writing, ARB's RSI is at 29.79 levels, below the neutral line. This suggests that market participants prefer to sell ARB rather than holding or accumulating more tokens. Meanwhile, ARB's CMF is at -0.10, indicating increased liquidity outflow from the ARB market, which could exert selling pressure on its price.
Conclusion:
Based on the analysis of on-chain metrics, market sentiment, and technical indicators, there is potential for a decline in the price of ARB in the short term. If selling pressure increases, ARB price may fall below the long-term support at $0.92 and move towards $0.84. However, it should be noted that this analysis cannot guarantee future ARB price movements, and investors should always do their own research before making an investment decision .
⚠️Disclaimer
This content aims to enrich readers with information. Always conduct independent research and use discretionary funds before investing. All buying, selling, and crypto asset investment activities are the responsibility of the reader.