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Vitalik Buterin, co-founder of Ethereum (ETH), gave a good rating to Arbitrum’s (ARB) phase one completion, which led to a 22% increase in the token’s price a few hours later. Buterin commented on L2 during Warpcast.
Praise from Buterin for ARB
According to the Ethereum founder, Arbitrum’s transition to phase one means it is the first L2 to truly move towards decentralization. Phase one completion signifies that Arbitrum has met all five conditions for becoming fully decentralized, one of which is allowing users to exit without the help of permissioned operators.
A system protected against fraud can provide scalability on-chain while guarding against incorrect state transitions. Vitalik Buterin expressed his satisfaction, stating that he would be pleased if other rollups reached phase one by 2024. He added:
I’m really happy that we have clearly one phase one rollup this year and several more very close to phase one. True decentralization. Next year, let’s move to ten phase one rollups and to some extent, decentralize the sequencer.
Moreover, the price increase could be a relief for ARB holders who had to endure the price movement induced by the Arbitrum Foundation AirDrop to early users. Despite being 86% below the launch price, a 90-day increase of 76.45% could mean that the token is on its way to a new peak. Another factor driving ARB’s movement is ETH.
The Correlation Between ARB and ETH
Furthermore, as an Ethereum L2, Arbitrum’s foundations suggest a high likelihood of a strong correlation with ETH. According to Coinglass data, open positions have increased by 29% in the last 24 hours. Open interest is the number of outstanding derivative contracts tied to a cryptocurrency that have not been settled. An increase in open positions can mean a rise in open long/short positions. However, a decrease in open positions indicates a reduction in liquidity allocated to contracts. Considering the price movement, an increase in open positions could trigger a continuation of the bullish trend.
Therefore, predicting a rise to $2 for ARB is not unfounded. Yet, market participants should pay attention to ETH’s price movements. If ETH slows its momentum, ARB might do the same. Conversely, if ETH moves towards $2,500, ARB could surpass the $2 mark.
