Arbitrum has managed to maintain its place among the top names in decentralized finance (DeFi) despite the adverse conditions that gripped the market in 2023. However, the price of ARB (the network’s native token), which was euphorically welcomed in March, has fallen. struggle.
The Arbitrum token price fell to a new all-time low of $0.747217 on Monday, September 11, with the honeymoon phase seemingly over. The value of the token fell by more than 12% in the past weekleaving investors wondering what could be behind this bearish move.
Whales part with millions of ARB tokens in selloff
ARB’s latest price drop is related to increased market activity of Arbitrum whales in recent days. On Monday, crypto journalist Colin Wu reported this that three whales transferred 10.23 million ARB (worth approximately $8 million) to Binance.
The first whale reportedly sold 3.8 million ARB for $0.77 per token, while the second whale – with the pseudonym vladilena2.eth – sold 3.63 million ARB for $0.83 per token. Meanwhile, the third whale moved 2.8 million ARB for $0.79 per token.
This apparent loss of interest in whales may have accelerated the downward pressure that pushed Arbitrum to a new low. Unfortunately, there seems to be no end in sight as whales have continued to dump their ARB tokens over the past few hours.
According to a Lookonchain reportseven whales dumped 20.41 million ARB tokens (worth approximately $16.05 million) in the last 30 hours. The blockchain analytics platform revealed that these whales generated a total loss of $8.15 million.
It is worth noting that general market sentiment may have also contributed to ARB’s price performance. At the time of writing, the native Arbitrum token is valued at $0.781039, according to CoinGecko data.
Other possible reasons for a drop in arbitrage price
Another plausible reason for ARB’s recent price drop is declining activity on the Arbitrum network. While the chain continues to hold its own as a prominent L2 network, it has experienced a steady decline in total value (TVL).
According to DefiLlama dataArbitrum has a total of $1.65 billion in assets on its network, reflecting a decline of more than 35% in the past four months. This current figure also represents the network’s lowest TVL since March.
The continued decline in total value captured signals a loss of investor confidence, which could discourage participants from joining the network.
Recent governance proposals are another factor that may have contributed to the latest drop in the Arbitrum price. Remarkable, PlutusDAO has submitted a proposal on September 9 to return tokens from the DAO treasury to ARB holders.
If approved, the board’s proposal would entail activating a staking mechanism and creating a proprietary return for participants, which could lead to an annual release of up to 2% of the total token supply. Some investors see this proposal as inflationaryas this would likely put downward pressure on Arbitrum’s price.
Ultimately, ARB’s latest market performance appears to be the result of a combination of loss of investor interest, declining network activity and unsatisfactory governance mechanisms.
ARB Price continues a downward trend on daily timeframe | Source: ARBUSDTS chart on TradingView
Featured image from SoFi, chart from TradingView