The price of Arbitrum (ARB) soared as the US Senate voted to raise the debt limit, sparking renewed interest in the market. ARB’s price rose by 9% to an intraday high of $1.25. Meanwhile, the price of BTC, ETH, BNB, XRP, and others experienced lighter increases during the same period.
The unusual buying activity responsible for ARB’s outperformance can be attributed to the actions of popular trader Andrew Kang, who deposited $1 million worth of stablecoins into Arbitrum pools and then exchanged his RDNT tokens (native token of DeFi lending platform Radiant Capital) for $867,000 worth of ARB. This move fueled speculation that Kang might be using leverage to go long on ARB by depositing ARB to borrow USD Coin (USDC) from Radiant Capital.
On the other hand, there may be potential headwinds that could hinder ARB’s rally. An anonymous whale deposited $1.5 million worth of ARB to the OKX exchange simultaneously to Kang’s transfers, which could signify intent to sell. If demand for ARB drops, this may lead to a pullback in the token’s price.
The technical setup for ARB on the daily chart is another cause for concern as it shows a bear flag pattern. This pattern emerges as the price consolidates between two rising, parallel trendlines after a strong move downward. Traditionally, a bear flag resolves when the price breaks below the lower trendline and falls by the same degree as the previous downtrend’s height. If the pattern holds, this would put ARB’s price on track to reach $0.95 in June, which is a roughly 20% drop from current levels. However, a decisive breakout above the flag’s upper trendline could negate the bearish outlook and set ARB on a path toward $1.35, its next resistance level from the March to May 2023 session.
In conclusion, the recent price surge for ARB has generated mixed feelings within the crypto ecosystem. While there are aspects that indicate bullish support for the token may continue, other factors suggest the potential for a pullback in the near future. As with any investment, it’s essential for market participants to carefully weigh the pros and cons and make informed decisions based on their unique risk tolerances and investment objectives.