Arbitrum (ARB) price nears its all-time low of $0.91 as the supremacy battle among Layer-2 (L2) networks heats up. Vital on-chain indicators explore how the emergence of Base in recent weeks could have contributed to ARB price decline.
On August 25, the rising Layer-2 network, Base announced a “Protocol Management and Economics” proposal, which will see the Coinbase-backed scaling network earn up to 118 million OP tokens in a long-term revenue and cost-sharing arrangement.
The ‘superchain’ partnership between rival Base and Optimism (OP) appears to have impacted Arbitrum native token price negatively. Can ARB price bounce back from another all-time low after previously testing the critical $0.90 support in June 2023?
Base Becomes the Fastest L2-Network to Hit 100,000 Users
Base grabbed headlines on August 24, when it became the fastest Layer-2 chain to reach 100,000 users. According to blockchain data analytics platform Delphi Digital, Base achieved the milestone 56 days after its mainnet launch.
Delphi Digital tracks the Daily Active User data by aggregating the daily number of unique addresses interacting on a blockchain network. Evidently, Base’s rapid emergence has added a new twist to the supremacy battle among prominent Ethereum L2 networks, including Arbitrum (ARB), Polygon (MATIC), and Optimism (OP)
Furthermore, on August 25, Base put paid to rumors suggesting it could launch its own native token. Rather, it entered into a revenue and cost-sharing partnership with rival Optimism.
On-chain indicators reveal that this has triggered bearish signals across the Arbitrum network, driving the ARB token price toward its all-time low.
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While Base is Gaining Traction, Arbitrum Active Users Slid to All-Time Lows
The emergence of Base appears to be pulling investors’ attention away from the Arbitrum network. In confirmation of this thesis, the Santiment chart below shows how ARB Active Addresses dropped below 6,500 in five of the last ten trading days.
Notably, before August 19, Arbitrum had never registered less than 6,500 Active Addresses since it was launched in March 2023.
Active Addresses is a vital measure of market demand for a cryptocurrency. A persistent decline in Active Addresses is a bearish signal indicating a drop in the number of users deploying transactions on the Arbitrum network.
The negative divergence between Base and Arbitrum network activity suggests investors are switching attention away from the ARB token. Unsurprisingly, Arbitrum’s price has now retraced 6% from August 24 since the Base x Optimism ‘superchain’ announcement.
In addition, the recent spate of hacks and rug-pulls on the Arbitrum network may also have been pivotal to the network activity decline.
In conclusion, with ARB network demand now at all-time lows, the chances of a potential early price rebound will weigh heavily on users returning to the network.
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ARB Price Prediction: The $0.90 Support Is Critical
Based on the critical factors analyzed above, ARB dropping below the $0.90 support level could catalyze bigger losses. The Global In/Out of Money Around Price (GIOM) data, which shows the entry price distribution of current Arbitrum holders, also validates this prediction.
The chart below shows that 20,540 addresses had bought 61.9 million ARB at the minimum price of $0.94. If they hold firm, they can offer a formidable last line of defense.
However, if that support level folds, a panic sell-off could trigger a rapid Arbitrum price downswing below $0.90.
In contrast, if Arbitrum regains sufficient network activity, the bulls could force a move toward $1.00. But in that case, the 32,000 addresses had bought 780 million ARB at the maximum price of $1.02, which could trigger a pullback.
However, if that resistance level cannot hold, ARB price could reclaim $1.20 for the first time since July 2023.
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The post Arbitrum (ARB) Price Nears All-Time Low as Investors Switch Focus to Rival L2 Chains appeared first on BeInCrypto.