Arbitrum, a layer-2 (L2) scaling solution from Ethereum, is gaining recognition from the cryptocurrency market. After the successful Shanghai upgrade enabled staking withdrawals recently, the ARB price saw a 4.28% increase to $1.36, and 18% from the low of $1.15 the day before. Such growth suggests a potential uplift for Arbitrum in the second quarter of the year, allowing it to break its all-time high record of $1.60.

The crypto’s drive to a higher price is backed by a few key factors. First, data from Messari shows that Arbitrum generated $2.5 million in profits in March of 2023. This Sequencer Profit represents the fee revenue generated on the L2 chain minus the fee expense paid to the L1 chain, both of which are calculated in Ether. Such profits will eventually be channeled to the ArbitrumDAO, a community-managed DAO that hopes to become decentralized in the future.

Moreover, Arbitrum aims to monetize bid extraction – a feature lacking from the crypto – by letting DAO enforcers stake ARB tokens. This allows for incentives to align economically and if nefarious behavior is detected, a slash can ensue. On top of that, Arbitrum has outperformed its Ethereum L2 rival, Optimism, in several regards. Profit-wise, Arbitrum generated $22 million and $6 million in both the revenue and profits for the year 2022 respectively, more than those for Optimism. Likewise, the leading crypto not only retained a greater amount of value locked (its TVL of $2.27 billion is more than triple that of Optimism’s $930 million).

With that being said, signs point to a break above the key technical formation in the form of a Descending Triangle. The breakout on April 13 was coupled with higher volumes, positioning Arbitrum to pursue its previous trend and reach the $1.60 mark. Still, it should take note of an elevated Relative Strength Index (RSI) of the 4-hour chart as it could indicate a short-term correction of the price towards its triangle’s upper trendline ($1.20).



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