arbitrum (ARB) Price Dropped 25% But Market Cap Reached New ATH, Here’s Why
Arbitrum, Ethereum’s Layer-2 scaling solution, has been experiencing some significant developments lately following the token unlocking on Saturday, March 16. Arbitrum (ARB) price has corrected 25% since then and is currently trading at $1.51.
Arbitrum (ARB) Price and Market Cap Correlation
Arbitrum launched a “Cliff Unlock” event on March 16, distributing 1.1 billion ARB tokens simultaneously to investors, team members, and advisors. Such an event usually triggers selling concerns in the market, resulting in a significant drop in the value of the native token.
Arbitrum opted for all tokens to be released simultaneously. Of the total, 673.5 million tokens were allocated to advisors and the team, while the remaining 438.25 million tokens were distributed to investors.
On the other hand, Arbitrum’s market cap increased by a staggering 80% in the last 24 hours to over $4.0 billion. The increase in Arbitrum’s market cap is due to several factors, including increasing adoption and utility in the crypto ecosystem. Although the price per token is lower compared to previous highs, the overall market cap has reached new levels, indicating strong demand and investor confidence in the project.
An important aspect that plays a key role here is tokenomics, particularly the inflation rate. For example, although solana‘s price per token is lower than the previous all-time high (ATH), its market cap has reached a new high. The ARB token operates with similar tokenomics.
Inflation mechanisms involve the periodic release of new tokens into circulation, and achieving all-time high (ATH) prices relies heavily on the expansion of market capitalization (market value) to offset inflationary pressures.
ARB Token Whale Activity
Analysis platform Lookonchain on March 18 clarified Transfer of approximately 58 million ARB to stock exchanges. This is only a small portion of the unlocked tokens. Data shows that 11 large-scale investors, or “whales”, are behind these transactions.
These data show that while some investors engage in profit-seeking activities, a significant portion of whales prefer to hold ARB assets, indicating continued confidence in the long-term prospects of the project.
According to data from Santiment, transactions exceeding $1 million on March 16 coincided with the ARB token unlocking. While this may indicate potential selling activity, there was a noticeable increase in wallets holding between 100,000 and 100 million ARB tokens on the same day. This suggests that significant whales are accumulating ARB despite current market concerns.
Significantly, these whales initiated token accumulation in the days before the unlock, coinciding with the downward trend in Arbitrum prices.
Courtesy: Santiment
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Bhushan is a FinTech enthusiast and has a good ability to understand financial markets. His interest in economics and finance draws his attention to the emerging Blockchain Technology and Cryptocurrency markets. He is in a constant learning process and motivates himself by sharing the knowledge he has acquired. In her spare time, she reads thriller novels and sometimes explores her culinary skills.
The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. Neither the author nor the publication accepts any liability for your personal financial loss.
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