- The price of Arbitrum’s ARB has tanked in the past week.
- The price decline comes amid a massive ARB token unlock.
- A large portion of the total Arbitrum supply remains locked.
In recent years, most crypto projects with fixed token supplies have adopted token lockups, unlocking tranches of the total supply over a long period instead of all at once, as a means of managing supply, expressing long-term commitment, and fostering investor trust amid fears of token dumps by team members.
Despite being preferred to the alternative, token lockup strategies do not entirely eliminate investor nerves, particularly around scheduled token unlocks.
Arbitrum is the most recent network to face this uncertainty. Amid a recent large token unlock, the token’s price has spiraled down.
Arbitrum (ARB) Price Takes a Hit
On Saturday, March 16, the Arbitrum network unlocked 1.1 billion ARB tokens, worth over $2.2 billion and representing just over 76% of the circulating supply. Per a TokenUnlocks breakdown, about 60% of the unlocked tokens, about 673 million ARB worth nearly $1.4 billion, were supposed to go to the project’s team. At the same time, almost 440 million ARB tokens worth about $890 million were earmarked for investors.
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In the week before the token unlock, ARB’s price began to take a sharp dive from highs of about $2.28, ultimately dropping to about $1.97 in the moments before the unlock. Following the mammoth token unlock, this downward spiral continued, with ARB tanking 18% to near year-to-date lows of about $1.6.
The price reaction is likely the result of investors hedging their positions ahead of the token unlock, anticipating the potential impacts of supply inflation. Further adding to the downward pressure, following the 1.1 billion tokens unlock, whales have sent 34 million ARB tokens worth $58 million to exchanges, according to crypto smart money tracker Lookonchain.
At the time of writing, ARB continues to trade around the $1.6 price point at the bottom of a multi-month price range it has been locked in since the start of 2024. Investors would be watching to see how the price reacts at the level as a bounce could signal a surge back to range highs, while a confirmed break below could signal more downside.
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About 73% of the ARB token supply, or about 7.3 billion ARB, remains locked, according to TokenUnlocks data. Arbitrum’s next token unlock is slated for April 16, when 92.65 million ARB tokens will be unlocked.
On the Flipside
- ARB remains firmly in an uptrend on higher time frames, with the asset clinching a new all-time high of about $2.4 in January 2024.
- Like many other Ethereum Layer 2 chains, the Arbitrum has recently received a boost from the Dencun upgrade.
- Like most crypto assets, the price of Arbitrum is significantly influenced by market sentiment around Bitcoin.
Why This Matters
ARB’s recent price action highlights the uncertainty surrounding projects around the time of token unlocks.
Read this for more on Arbitrum:
Ethereum Blobs Go Live on Arbitrum with Atlas Upgrade
Learn more about the Ethereum Dencun upgrade:
Here’s What Ethereum Dencun Changes; What’s Up Next for ETH?
