Arbitrum (ARB) Faces Potential Selling Pressure As 1 Billion Tokens Become Unlocked In March
February 21 2024 - 9:00PM
NEWSBTC
Arbitrum, the cryptocurrency network designed as a scalability
solution for the Ethereum blockchain, has recently experienced a
notable price correction, resulting in a drop in its native token,
ARB. Over the past 24 hours, the token’s value dipped to $1.84,
marking a retracement of 5%. As February draws to a close,
attention is now turning to the potential downside price action
expected in March as a substantial number of ARB tokens are set to
be unlocked. Major Unlock Event Looms For Arbitrum According to a
recent announcement on X (formerly Twitter), more than 1.11 billion
ARB tokens, estimated at $1.24 billion, are scheduled to be
released on March 16, 2024. This unlocking event signifies
the beginning of a four-year phased unlocking process, which will
gradually release a certain number of tokens every four weeks until
2027. The total number of tokens in circulation for Arbitrum
currently stands at 1.275 billion, meaning the unlock will release
an equivalent of 87% of the circulating supply, nearly quadrupling
it to 2.375 billion tokens. Token unlocks, especially when they
exceed the average daily trading volume, can act as bearish
catalysts for token prices as they introduce additional liquidity
into the market. This influx of tokens can create inflationary
pressures, leading to increased volatility and speculative
trading. However, to fully understand the potential impact on
ARB, it is crucial to examine historical data that sheds light on
the token’s price performance following previous unlocks. Related
Reading: Bitcoin Millionaire Takes A Shot At Cardano For Being A
‘Wannabe Ethereum’ – Details According to Token Unlocks data, there
has been only one cliff unlock event for ARB tokens in the past.
Analyzing the price impact that followed this unlock provides
valuable insights. On the first day after the unlock, the price of
ARB experienced a 3% increase, indicating positive market sentiment
and initial demand. Subsequently, the token’s price gradually
declined, reaching a low of -21% approximately 21 days after the
unlock event. However, at around the 25-day mark, the price began
to recover significantly, skyrocketing by 19% above the unlock-day
level. These historical patterns suggest that while ARB may
face initial downward pressure following the upcoming unlock, there
is a potential for recovery and positive price movement in the
following weeks. Nevertheless, it is important to note that market
conditions and investor sentiment can vary, and past performance
may not necessarily indicate future outcomes. ARB Price
Analysis In the event of a potential 20% price decline from the
current level of $1.84, ARB may face selling pressure and a lack of
demand. To safeguard its current all-time high (ATH) of $2.4, bulls
must defend major support walls. Forecasting a potential dip to
around $1.44, the next crucial support level for bulls to monitor
is $1.42. This support level would be the last line of defense
before a potential further decline to the subsequent support line
at $1.25. If both levels fail to hold, the $1 mark would be at
risk, with the last support for bulls at the $1.102 level. Related
Reading: Bitcoin Bulls In Jeopardy? Analyst Sounds Warning Of
Possible Retest It is important to note that the token unlock
event’s outcome and ARB’s subsequent price action remain
uncertain. Additionally, the crypto market is bracing itself
for the Bitcoin (BTC) halving event, which could introduce
additional volatility to the overall market as the event draws
nearer. Featured image from Shutterstock, chart from
TradingView.com
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