Arbitrum (ARB) has seen notable chain growth over the last 24 hours, surpassing competitors like Solana and Sui Network in terms of Chain Netflow. However, despite this positive activity on the network, the token’s price remains stagnant, leaving traders questioning whether ARB can sustain upward momentum. Recent data shows that both retail and whale investors are pulling back, contributing to bearish sentiment that is holding ARB back from a breakout.

Positive Chain Activity, But Price Struggles

Arbitrum has recently seen a significant spike in Chain Netflow, with $16.6 million in assets moving into the network within the past 24 hours. This marks the highest netflow among layer-one blockchains, outpacing other projects such as Solana and Sui Network. Chain Netflow tracks the net movement of assets into and out of a blockchain and is typically seen as an indicator of increased network activity. Despite the surge in Chain Netflow, ARB’s price has not responded with significant upward movement.

This discrepancy between network activity and price movement suggests that external factors, such as market sentiment, may be weighing heavily on ARB’s price action. According to analysis by AMBCrypto, the continued bearish outlook across the market is stalling ARB’s potential recovery, even as its chain shows healthy growth.

Declining Retail and Whale Participation

One of the primary factors contributing to ARB’s stagnation is declining participation from both retail and whale investors. Data from Artemis shows that active addresses (AA) in the market have dropped dramatically from 28,000 to just under 15,000 in the past 24 hours, signaling waning interest among market participants. Although there was a slight weekly increase of 0.54%, the sharp decline in active addresses suggests that many traders are stepping back from ARB for now.

This drop in activity is compounded by bearish sentiment dominating the market. According to IntoTheBlock’s Bull and Bear indicators, there are currently 139 bearish addresses compared to only 130 bullish ones. The higher number of bearish addresses suggests that the prevailing market force is pushing prices downward.

Whale Activity Diminishes

Whale participation in ARB has also been on the decline, a trend that typically signals reduced accumulation of the asset, which is often an essential precursor to upward price movement. In the last 24 hours, the number of large transactions involving ARB dropped to just 401, with a total volume of 120.59 million ARB. This decline in whale transactions suggests that larger investors are retreating from the market, further reinforcing the bearish sentiment.

The reduced involvement of whales, coupled with a dip in retail engagement, is resulting in diminished buying pressure for ARB. Without this significant support, ARB may face additional downward pressure, making it difficult for the token to break through resistance levels or experience substantial price gains in the short term.

Conclusion: Market Sentiment Holds ARB Back

While Arbitrum’s network shows healthy activity, including strong Chain Netflow, the token’s price remains under pressure due to declining participation from both retail investors and whales. Bearish sentiment continues to dominate, making it challenging for ARB to break past key resistance levels and experience meaningful growth. Investors will need to monitor changes in market sentiment, whale behavior, and network activity to gauge when ARB might see a recovery and potential breakout.