Arbitrum (ARB) has been facing persistent bearish momentum, trading at $0.72166, marking a 5.54% drop over the past 24 hours. The recent break below a crucial demand zone has heightened concerns among traders, suggesting that ARB may continue its downward trajectory unless market conditions improve swiftly. Both technical and on-chain indicators point toward the possibility of further declines, and the absence of strong buying activity has left the cryptocurrency vulnerable to additional losses in the near term.

Breakdown Below Key Demand Zone

Arbitrum’s failure to hold above its key demand zone has intensified selling pressure, indicating that the asset is struggling to find support. This breakdown is a continuation of the downtrend that has been in motion since November. The next potential support for ARB is at $0.65, with the long-term resistance trendline remaining intact, which further complicates the outlook for a swift recovery. The lack of buying interest in the market could lead to more declines, and unless significant buying volume enters the market soon, ARB may face a prolonged period of weakness.

Bearish Technical Indicators

Technical analysis paints a bleak picture for Arbitrum’s near-term prospects. The Relative Strength Index (RSI) has dropped to 37.13, signaling that the asset is nearing oversold territory. This suggests that selling pressure remains strong, and there is little momentum to push prices higher in the immediate future. Additionally, the moving averages (MAs) are reinforcing the bearish trend. The 9-day MA is positioned at $0.7682, while the 21-day MA stands at $0.8505, further emphasizing the downtrend. These technical signals suggest that the overall trend will likely remain bearish unless there is a significant change in market sentiment.

Weakening On-Chain Metrics

On-chain metrics further corroborate the bearish outlook for Arbitrum. The Net Network Growth has decreased by 0.98%, which suggests a slowdown in new adoption within the ecosystem. Other key metrics, such as the “In the Money” and Concentration indicators, have also shown declines, pointing to reduced investor interest. Large transactions have decreased by 14.73%, signaling lower institutional activity. Additionally, the Price DAA Divergence is at 14.89%, indicating a significant gap between user engagement and the token’s price performance. These metrics reflect diminished confidence in Arbitrum’s short-term recovery potential, contributing to the asset’s ongoing struggles.

Deteriorating Market Sentiment

Market sentiment is another crucial factor that underscores Arbitrum’s current challenges. Open interest has dropped by 2.90%, falling to $163.69 million, indicating that traders are hesitant to open new positions in ARB. This drop in open interest reflects a lack of enthusiasm for the token, which further contributes to the downward pressure on its price. Without an influx of new buyers or a shift in sentiment, ARB could face continued selling pressure in the coming days.

Conclusion: Bearish Momentum Persists

In conclusion, Arbitrum (ARB) is currently caught in a bearish trend with little indication of a near-term recovery. Weak market sentiment, declining on-chain metrics, and bearish technical indicators suggest that the asset is likely to continue facing downward pressure. Unless there is a significant shift in the market dynamics, ARB could struggle to regain its footing in the near future, and further declines are more likely than a swift reversal. Investors will need to closely monitor market conditions to gauge if a change in sentiment could trigger a rebound or if the bearish trend will persist.