Arbitrum Price Analysis: $0.60 Support in Jeopardy as User Activity Plummets

The cryptocurrency market saw an increase in supply pressure this week, beginning with a sharp downturn in Bitcoin from $70,000 to $66,254—a 5% drop. This decline halted the recovery trend across most major altcoins and heightened the potential for corrections. Concurrently, the Arbitrum price analysis indicates a 1.38% decrease today to $0.69, suggesting a significant reversal from crucial resistance.

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Arbitrum Price Analysis: Will the Falling Wedge Pattern Trigger a Bullish Reversal?

The recovery momentum in the crypto market has witnessed a notable drawdown since last week as Bitcoin struggles to sustain above $70000. The overhead supply has sparked a correction in several major altcoins, including Arbitrum.

On July 23rd, the Arbitrum price analysis showcased a sharp reversal from $0.828 resistance, which plunged the asset by 16.8% and hit $0.69. A deeper analysis of the daily chart shows this bear cycle within the formation of a falling wedge pattern.

The pattern’s two converging trendlines, acting as dynamic resistance and support, have led to a downtrend since April 2024. The coin price trading below the daily EMAs (20, 50, 100, and 200) hints that the path to least resistance is down.

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As per data sourced from Dune Analytics, the number of active addresses on the Arbitrum network has significantly declined over the past three months. From a May peak of 4.01 million, active addresses have decreased to 648.2 thousand, marking an 83.84% drop. A similar downturn is observed in the influx of new users, with the on-chain metric plummeting from 2.7 million to 181.6 thousand—a 93.27% reduction. 

This substantial reduction in both active and new users suggests a waning interest or shifting user base, which could impact network activity and influence the valuation of assets within the ecosystem.

If bearish momentum persists, the Arbitrum price analysis shows a 16% down risk to retest $0.565 support, followed by $0.46.

On a contrary note, the falling wedge pattern is now a bullish reversal pattern that could bolster buyers to challenge the overhead trendline. The potential breakout will accelerate buying momentum and push the asset back to $0.24.