Arbitrum price rally likely to extend as ARB TVL doubles in a year

Arbitrum (ARB) price has climbed more than 65% in the past month, following the broadly bullish crypto market sentiment stemming frrom anticipation of a spot Bitcoin ETF approval. Adding to this, the Layer 2 chain has registered a steady increase  of its Total Value Locked (TVL) over the past week, and . ARB’s on-chain metrics support further gains ahead.

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Arbitrum TVL more than doubled since 2023

The Total Value Locked (TVL) on the Arbitrum chain has more than doubled in the last year. The TVL climbed from $1 billion in January 2023 to $2.479 billion on January 10, 2024, according to data from DeFiLlama. 

Arbitrum TVL. Source: DeFiLlama

An increase in TVL typically indicates the relevance of a chain among users and demand among market participants. Arbitrum price has rallied more than 65% in the past 30 days, alongside theincrease in its TVL. 

On-chain metrics such as active addresses and volume on Arbitrum have been increasing consistently since January 7 according to data from Santiment.

Arbitrum volume and active addresses. Source: Santiment 

Arbitrum currently dominates the Layer 2 market with 49.2% share of the $19.91 billion ecosystem. Data from L2Beat shows that Arbitrum is followed by Optimism, with a market share of 28.41%. 

Arbitrum’s on-chain metrics support an ARB price gains thesis. However it remains to be seen whether ARB price suffers a correction or extends its gains. Crypto analyst behind the X account @OnChainDataNerd noted on Wednesdaythat market makers have deposited a large amount of ARB tokens to exchanges in the last 24 hours,. Generally, an increase of the supply on exchanges is considered a bearish sign because they are more likely to be sold.

Market makers GSR and Wintermute deposited 7.5 million and 4.78 million ARB tokens, respectively, to exchanges. These deposits account for a total of over $20 million worth of ARB. It remains unclear whether these tokens will be sold or held in exchange wallets. 

Market maker transactions. Source: OnChainDataNerd’s tweet

If market makers shed their token holdings, it is likely to increase selling pressure on ARB and influence the price negatively.