Has Arb Finally Hit Rock Bottom? Key Figures Suggest So
Journalist
- ARB’s main indicator presented a buying opportunity on the charts
- The market continues to be dominated by a pessimistic sentiment
The market value to realized value (MVRV) ratio of the leading Layer 2 (L2) token Arbitrum [ARB] The charts have shown a buy indication. In fact, AskFX found that the native token’s ratio was negative at press time compared to the 30-day and 365-day moving averages.
The MVRV ratio of an asset is the difference between the current market value and the average cost of each coin or token acquired.
Overvaluation occurs when the value of an asset is greater than one and positive. The asset’s current market value is higher than what most investors paid to acquire it. A negative MVRV indicates an asset that is undervalued. This value indicates that the market price of the asset is lower than the average purchase price of its circulating tokens.
When an asset’s MVRV ratio is negative, it is considered a good time to buy because the asset is trading at a discount to its historical cost at that time.
No price bottom in sight
When a local price bottom has been reached, it is a good indication that an asset is about to rally in price. The spent age of an asset is a good indicator.
This metric measures the movement of dormant coins. ARB spent age has been forecasting slightly lower values since the beginning of May.
This is crucial because it provides insight into the changes in the behavior patterns of long-term token holders. This group of ARB holders rarely moves their old coins, but when they do, it can lead to a change in market trends.
When ARB’s Age Consumed metric rises, it means tokens have been moved after a long period of inactivity. However, when it falls, it means coins have been left idle.
Here is the ARB market cap in BTC terms.
ARB’s Age Consumed tokens have returned low values since early May – a sign that long-term holders have barely moved their tokens.
This could also be a sign that the price bottom is yet to come. ARB’s MVRV ratio is a buy signal, but traders should proceed with caution.
ARB’s 1-day price chart also showed that bearish sentiment is still significant.
ARB’s share price was trading below its simple moving average (20-day SMA) at the time of publication, confirming that further declines are possible.
When the price of an asset falls below the 20-day SMA, it indicates that the short-term direction for the asset is downward. This is interpreted by traders as a sign of sellers’ control and that asset prices will continue to fall.
The token’s Relative Strength Index (RSI), which measures the token’s relative strength, returned a reading of 37.31 – suggesting that market participants favored ARB distribution over its accumulation.