Arbitrum (ARB) is currently trading above the crucial resistance level of $1.17, but this rise might not last. The potential for profit-taking by ARB holders could lead to a price drop, driven by the recent increase in profits.

Is a Sell-Off Looming for ARB?

The popular cryptocurrency Arbitrum may see its price decline due to growing bearish indicators among ARB holders. The market value to realized value (MVRV) ratio, which measures investors' profits and losses, suggests a potential sell-off. Arbitrum's 30-day MVRV is at 20%, indicating profits that might encourage holders to sell. According to historical data, ARB corrections typically happen when the MVRV ratio is between 7% and 24%, putting the current situation in a danger zone. This outlook is supported by investors who have recently been taking profits, as ARB surged by 20% last week, its first gain in nearly a month.

Resistance Broken for ARB

Recent gains have turned realized losses into profits across the network, which might continue to increase as investors sell to secure their gains. Despite breaking the month-long resistance of $1.17 and currently trading at $1.18, Arbitrum could still face a decline due to strong bearish signals. The Ichimoku Cloud, a comprehensive technical analysis tool that provides insights into support, resistance, trend direction, and momentum, indicates that the market is still in a bearish trend. As long as the Cloud remains in a downtrend, a positive outcome for ARB is unlikely. Consequently, Arbitrum's price could drop to $1.1 or even lower, possibly reaching $0.92.

Conclusion

In summary, while Arbitrum has recently broken past a key resistance level, the potential for increased selling pressure from profit-taking investors could lead to a price decline. The bearish signals, supported by the MVRV ratio and the Ichimoku Cloud, suggest that ARB's price might fall in the near future.