ARB gained more than 49% over the past month as activity on Arbitrum soared. Cointelegraph explains what’s behind the trend.
ARB, the native token of Arbitrum, a layer 2 Ethereum scaling platform, is the leader within its sector after posting a 49.49% move over the past month.
While the market price action of the last week has negatively impacted altcoins and ARB price, longer-timeframe data suggests that ARB could resume its bullish momentum.
Arbitrum dominates Ethereum layer 2 TVL
ARB has outperformed other popular tokens such as Optimism, Binance Coin
$301 and Solana
SOL 
$98 , which have risen 47%, 25% and 19%, respectively, over the same timeframe, but exactly what is behind ARB’s recent strength?
ARB’s trading volume recently surpassed $3.3 billion after rising approximately 3,000% in a month, according to data from CoinMarketCap.
According to daa from L2Beat, Arbitrum dominates Ethereum layer 2 TVL, accounting for a whopping 49.86% of the total $20.92 billion.
Data from DeFi data aggregator DefiLlama revealed that Arbitrum’s TVL has been increasing over the last three months, rising more than 45% from $1.66 billion in October. 2023 to the current value of $2.41 billion.
The layer 2 protocol boasts a diversified asset portfolio consisting of 30.9% Ethereum
$2,425 , 23.68% ARB tokens, 29.66% stablecoins, and 15.76% in other assets.
The upcoming Ethereum Dencun upgrade incorporates changes proposed by EIP-4844 – Proto-Danksharding – resulting in a reduction of rollup transaction costs, which will be passed on to end-users. This is expected to reduce gas fees paid per transaction and improve network capacity.
Through this proposal, Dencun is particularly expected to increase data availability for layer 2 roll ups such as Arbitrum.
The upgrade will lower the cost of storing on-chain data and optimize block space. This will result in more efficient and cost-effective operations, which will boost the operations of layer 2 solutions that rely on optimal data management on Ethereum.
This has contributed to the positive sentiment surrounding Ethereum. As a result, scaling solutions such as Optimism (OP) and Arbitrum have experienced significant price increases.
Is ARB’s bulli flag a hint of what is to come?
After reaching an all-time high of $2.11 on Jan. 4, ARB price pulled back as sellers booked profits and the wider crypto market corrected.
Despite the correction, a bull flag can be seen on the daily chart, which hints at the continuation of the uptrend.
ARB bulls face resistance from the flag’s upper boundary at $1.826. A daily candlestick close above this level would signal a possible breakout from the chart formation, projecting an uptick to $3.60. Such a move would represent a 116% ascent from the current price.
The 50-day exponential moving average, 100-day EMA, 200-day EMA and the relative strength index (RSI) were all facing upward, suggesting that the market conditions still favored the upside. The price strength at 55 indicated that the bulls still dominated the market.
On the other hand, the bears may pull the price lower with the flag’s lower limit at $1.54, providing the first line of defense. Additional support lines could emerge from the $1.40 psychological level and the major support zone between $1.17 and $1.38, where all the exponential moving averages lie.
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