Arbitrum (ARB) Shows Buy Signal: Why Timing Might Be Off

Arbitrum’s on-chain metrics have shown a buy signal amidst market consolidation, but a closer look at its performance indicates the possibility of a short-term decline in value. At the moment, the token’s Market Value to Realized Value (MVRV) ratio, calculated using different moving averages, returns negative values. While a negative MVRV ratio typically suggests an undervalued asset and a good buying opportunity, it’s important to note that ARB has had negative sentiment since April. Historic trends have shown that poor sentiment can actually precede a buying opportunity as exhausted sellers lead to uptrends. However, other indicators suggest that the market may see further downtrends in the short term. The Relative Strength Index (RSI) is currently below the neutral line, implying more selling than holding or accumulating of ARB. Additionally, the Chaikin Money Flow (CMF) indicates increased liquidity exiting the token’s market, which could exert downward pressure on its price. If bearish pressure continues, ARB’s price may drop below its long-term support of $0.92 and even fall to $0.84. However, if the projection is disproven and the bulls regain control, the token’s price could rally above $1 and reach $1.2.