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Arbitrum (ARB) has been on a downward trend since the mini bull run in March, with the price dropping 1.4% in the last 24 hours to around $0.546 during the New York trading session. However, recent developments in the Arbitrum ecosystem indicate a potential bullish breakout that could see ARB‘s price rise by over 50% in the short term.
Arbitrum DAO Approves ARB Staking
Arbitrum DAO recently approved a significant proposal that could reshape ARB’s future. This proposal, presented by Arbitrum delegate Frission, aims to introduce ARB staking on the Layer-2 network. Frission’s initiative stemmed from concerns that the altcoin was struggling to gain value and fully realize its potential as a governance token. The proposal garnered strong support, with 91% of over 25,000 voters in favor.
Following this approval, the next step involves submitting an on-chain proposal on Tally to secure $200,000 in funding for the development of the staking platform. If accepted, this development, marking a significant milestone for the Arbitrum network, is expected to begin in August.
Technical Analysis Indicates Bullish Breakout Potential
Despite the recent downtrend in ARB’s price, technical analysis indicates a potential reversal. ARB’s price chart reveals that the altcoin is currently moving within a descending wedge formation, typically seen as a bullish reversal indicator. Additionally, the price is trading below both the 21 and 50 Exponential Moving Averages, which serve as key resistance levels. However, ARB’s recent upward movement and the formation of higher highs since August 8 suggest that the altcoin may be preparing for a breakout.
If ARB successfully breaks out of the descending wedge formation, it could rise by approximately 51.48% to the resistance level around $0.8124. Additionally, data from Coinglass reveals a significant buy wall with over $1.276 million in unfilled buy limit orders between $0.52 and $0.53. While this buy wall could provide the necessary support to maintain momentum, a breakdown below this level could indicate further weakness and potentially drop the price to $0.49.
Relative Strength Index (RSI) and Bollinger Bands also indicate that ARB is currently in the oversold region, which could lead to a short-term bounce. While ARB remains in a strong downtrend, its proximity to a support level and the oversold RSI present a potential buying opportunity for those looking to capitalize on a short-term rally and a potential 50% bullish breakout.
