Trader Flags ‘Aggressive Price Swings’ in Ethereum-Linked Cryptocurrency

The well-known crypto analyst Altcoin Sherpa, who operates under a pseudonym, has recently indicated a downward trend in the cryptocurrency Arbitrum (CRYPTO:
ARB), predicting it may fall to levels of $1.20 or even below.

What Happened: The concerns voiced by Sherpa via a
tweet relate to “nasty price moves” affecting Arbitrum, a Layer-2 solution aimed at scaling Ethereum (CRYPTO:
ETH). He appears eager for the digital token to stabilize and “consolidate and chill” prior to establishing a firm bottom.

Sherpa also mentioned the coin’s breach of the 200-day exponential moving average (EMA), a bearish indicator that suggests the possibility of a complete retracement of its prior gains. The 200-day EMA is instrumental for traders, serving as a barometer for an asset’s long-term trajectory.

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Why It Matters: Digital asset custody leader BitGo has recently lent its support to Arbitrum, empowering users with expanded options for storing their assets across hot, custodial, and cold wallet solutions. As a Layer 2 innovation, Arbitrum is focused on refining upgrades and expanding development capabilities on the Ethereum platform.

A recent CryptoRank
tweet from early April has identified Arbitrum as the second-best blockchain in terms of total value locked per unique address, a ratio derived by dividing the TVL by the number of unique participating addresses.

In anticipation, a forthcoming feature dubbed Stylus is set to offer developers the luxury of crafting smart contracts with ease in Rust, along with other prominent programming languages, contingent on authorization from the Arbitrum DAO. Nevertheless, findings from L2BEAT reveal that although Arbitrum boasts a 44% dominance of all crypto reserves deposited across Ethereum’s numerous layer 2 networks, its market share is facing erosion to emerging competitors.

While the direction of ARB’s future performance is not cast in stone, the analysis by Altcoin Sherpa serves as a word of caution for market participants to heed.

What’s Next: The role of Ethereum as an institutionally recognized asset will undergo extensive discussion at the Benzinga Digital Assets event scheduled for Nov. 19.

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