- At least four major crypto exchanges have confirmed plans to list Arbitrum's upcoming crypto asset, ARB.
- ARB comes in to compete against Optimism's OP token in the Ethereum Layer 2 market.
- Relative performance post-exchange listing of recent altcoins provides direction on what to expect from ARB.
Binance, Coinbase, Bybit, and Huobi crypto exchanges, among others, have confirmed plans to list Arbitrum ARB token ahead of Thursday's airdrop. After the airdrop, users will be able to trade ARB/BTC and ARB/USDT pairs.
Arbitrum is a Layer 2 (L2) solution designed to scale Ethereum. It lowers network congestion and transaction fees from Ethereum’s mainnet. The ARB token airdrop has been a hot topic, much-anticipated, as it would mark the governance token’s transition into decentralization.
Right from the airdrop pre-update, protocols and tokens related to the project have surged, with the Arbitrium’s native decentralized exchange Camelot attaining a Total Value Locked (TVL) of $100 million. DeFiLlama data shows Camelot's TVL soared over 37% since March 17. Similarly, Arbitrum's I Owe You (IOU) token's price synced with the theories related to the Arbitrum token airdrop.
As a result, market players have raised a new wave of speculation, predicting the value of ARB post-launch. Some have drawn similarities between Arbitrum's ARB and Optimism's OP in price valuation as prominent Ethereum-based roll-up tokens.
Assessing Arbitrum's growth potential using Optimism as the benchmark
Optimism (OP) is the closest competition for ARB, given that both are the largest L2s using Optimistic roll-up technology to scale Ethereum. ARB will debut with an initial circulating supply of 12.75%, relative to OP's current 7.3%. This implies approximately $2.5 billion of liquidity available on day one.
The liquidity is likely to help facilitate more efficient price discovery for ARB token, with 1.13% of the 12.75% airdrop going to DAOs to boost ARB rewards. This could include incentives to liquidity providers in the respective protocols, a move that would further drive TVL after the airdrop.
Using the Optimism’s FDV/TVL benchmark for Arbitrum, ARB could trade at a fair value of around $6 after the airdrop, as reported earlier.
Arbitrum's relative performance post-exchange listing
Token listings tend to bring bigger price pops, especially where high net-worth exchanges like Binance and Coinbase are concerned. In crypto jargon, this is dubbed the "Coinbase effect," as the theory worked when projects like Cardano (ADA) when they listed on the US-based exchange.
The general observation of altcoins post-listing is that they rally with high volatility due to the crowd before momentum eases down. For instance, after Aptos (APT) was listed on October 19, 2022, it pumped to a wick as high as $100 on Binance and around $17 on most other platforms before quickly retracing to the $6 - $8 range. This constituted a 94% decline from the peak price after giving a 20-million-coin airdrop.
APT/USDT, BLUR/USDT, ENS/USDT, OP/USDT
Altcoins like BLUR, ENS, and Optimism (OP) recorded similar price actions as shown in the one-day charts above for the respective tokens. Accordingly, the ideal move is to wait and let the initial excitement subside. This will be a time when airdrop farmers, MEV farmers, and retail investors that panic-bought, will have sold their holdings and calmed down.
By this time, the ARB's price will have established an all-time high (ATH) and dropped at least 50% to 65% from its peak price, marking the ideal time for investors to buy in. Beyond that, the next price action for Arbitrum would hinge completely on the general landscape of the crypto market.
Nevertheless, the airdrop's timing is perfect, right after the FOMC meeting on March 22. With the scent of the eerie banking crises still present, the Fed raised rates by only 25 bps, restoring calm in the crypto market as most market players expected the outcome.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.