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Arbitrum Struggles to Reclaim $1 Level as Bitcoin Surges: Will ARB Bulls Win?

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Arbitrum (ARB), a leading Layer 2 (L2) roll-up solution, has faced challenges in regaining the $1 psychological level over the past week. After a $24k retest of Bitcoin on June 10, ARB dropped below $1. Even though Bitcoin has climbed above $25k and even passed $26k, the fate of ARB’s bullish reversal on a higher timeframe remains uncertain. ARB’s recovery faces significant hurdles despite rebounding to $0.9075 at the time of writing. Let’s delve into the details.

Bearish Consolidation and Block Orders:

Between June 10 and 18, ARB experienced a narrow consolidation range between $0.9075 and $1.034. Notably, the range high coincided with a bearish order block (OB) which formed at $1.001 – $1.034 (white) on the four-hour chart on June 13. Above this bearish OB lies the 38.2% Fibonacci level at $1.0417. Moreover, the May support-turned-resistance level of $1.0623 could pose a challenging barrier to moving beyond the range high, potentially making for a turbulent ride for bullish traders. Therefore, if the price is rejected at the high ($1.034), ARB might retrace to the $0.973 mid range or the $0.908 low.

Shorting Opportunity and Bullish Scenario:

In the event of price rejection at the range high, shorting at these levels can present a lucrative risk ratio, especially if subsequent declines test the range lows. However, closing the session above the 38.2% Fibonacci level ($1,042) would invalidate the bearish thesis, especially if Bitcoin ventures into the $27k zone. Nevertheless, ARB bulls will need to turn the $1.62 level into support to gain a more decisive advantage in the market.

Increasing Buying Pressure and Bearish Outlook:

The RSI (Relative Strength Index) and OBV (On-Balance Volume) indicators have recently increased, indicating increased buying and demand pressure. However, according to Coinglass, long positions have faced challenges in the last 12 hours before time of writing, with long positions worth over $100k liquidated compared to short positions of less than $10k. This depicts a bearish outlook for ARB. While this situation could amplify the opportunities for a short, a jump in Bitcoin above $27k has the potential to trap many bearish traders. Therefore, closely monitoring Bitcoin price action before placing a trade is essential.

Arbitrum’s struggle to reclaim the $1 level amid Bitcoin’s surge has posed a challenge for ARB bulls. Consolidation of bearish boundaries and block orders and resistance levels presents barriers. However, a potential shorting opportunity exists if price is rejected at the range high, while a bullish scenario requires sustained spikes in BTC and ARB reversing major resistance levels. Monitoring Bitcoin movement along with increasing buying pressure will help market participants navigate the current ARB situation.

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