July 24, 2024
Blockchain News

Arbitrum Struggles to Reclaim $1 Level as Bitcoin Surges: Will ARB Bulls Prevail?

Arbitrum (ARB), a prominent Layer 2 (L2) roll-up solution, has faced challenges in regaining its psychological $1 level over the past week. Following Bitcoin’s retest of $24k on June 10, ARB dropped below $1. Although Bitcoin has since climbed above $25k and even crossed $26k, the fate of ARB’s bullish reversal on higher timeframes remains uncertain. ARB’s recovery encounters significant hurdles despite a rebound to $0.9075 at press time. Let’s delve into the details.

Consolidation and Bearish Order Blocks:

Between June 10 and 18, ARB experienced a narrow consolidation range between $0.9075 and $1.034. Notably, the range high coincides with a bearish order block (OB) formed at $1.001 – $1.034 (white) on the four-hour chart on June 13. Above this bearish OB lies the 38.2% Fibonacci level at $1.0417. Additionally, the May support-turned-resistance level at $1.0623 could pose a challenging obstacle for moving beyond the range high, potentially making the journey turbulent for bullish traders. Therefore, if the price is rejected at the range high ($1.034), ARB might retrace to the mid-range of $0.973 or the range low of $0.908.

Shorting Opportunity and Bullish Scenario:

In the event of a price rejection at the range high, shorting at this level could present a favourable risk ratio, especially if the subsequent drop tests the range lows. However, a session close above the 38.2% Fibonacci level ($1.042) would invalidate the bearish thesis, particularly if Bitcoin ventures into the $27k zone. Nevertheless, ARB bulls must flip the $1.62 level into support to gain a more decisive edge in the market.

Improving Buying Pressure and Bearish Outlook:

The RSI (Relative Strength Index) and OBV (On-Balance Volume) indicators have recently increased, indicating improved buying pressure and demand. However, according to Coinglass, long positions faced challenges in the past 12 hours before press time, with over $100k worth of long positions liquidated compared to less than $10k of short positions. This paints a bearish outlook for ARB. Although this situation may solidify a shorting opportunity, a bullish surge in Bitcoin above $27k could potentially trap many bearish traders. Therefore, closely monitoring Bitcoin’s price action before trading is crucial.

Arbitrum’s struggle to reclaim the $1 level amid Bitcoin’s surges has posed a challenge for ARB bulls. The range-bound consolidation and bearish order blocks and resistance levels present obstacles. However, a potential shorting opportunity exists if the price is rejected at the range high, while a bullish scenario requires BTC’s sustained surge and ARB flipping key resistance levels. Monitoring Bitcoin’s movements alongside improved buying pressure will help market participants navigate ARB’s current situation.