Arbitrum’s RWA Market Reaches $1.02B, But ARB Prices Stagnate

Arbitrum’s RWA Market Reaches $1.02B, But ARB Prices Stagnate – Here’s Why

Arbitrum (ARB) has recently seen significant developments in its Real World Asset (RWA) market, which has grown to $1.02 billion. However, despite this progress, ARB prices remain stagnant. This article delves into the reasons behind the current price inactivity in the context of short-term market trends and Robinhood's involvement.

Key Takeaways

Arbitrum (ARB) is experiencing growth, notably with Robinhood's recent institutional participation.
While the Layer 2 (L2) blockchain on Ethereum shows long-term promise, the immediate outlook is mixed due to recent declines in on-chain activity.

Arbitrum: Can ARB recover as activity drops?

Long-term vs. Short-term Market Sentiments

Since 2022, Arbitrum has shown steady growth in on-chain activities. The trading volume on decentralized exchanges (DEX) has surged by approximately seven times, reaching over $647 billion at the most recent check.

However, the Total Value Locked (TVL) has seen fluctuations, increasing to $8.18 billion before retreating to $6.23 billion recently amid market weakness. Over the last 24 hours, the TVL has experienced marginal growth of less than 1%, indicating inconsistencies at smaller scales.

ARB Source: DefiLlama

Additionally, the supply of stablecoins has risen to $4.05 billion, marking a 2.27% increase over the past week. However, weekly trends indicate a decline in activity on the Arbitrum blockchain, which helps explain the lackluster price performance in the last month.

Active addresses have dropped significantly from 1.02 million to 596,000, and transaction volume has fallen from 14.6 million to 8.55 million, both declining by about 1.5 times in just one week.

Arbitrum Source: DefiLlama

The overall decline in activity has mirrored a similar trend in ARB prices since early October. Nevertheless, there is potential for a turnaround following Robinhood’s efforts to expand into Arbitrum for tokenization.

Robinhood’s Expansion: Impact on ARB Price and TVL

The market data shows bearish trends, yet the structure is setting the stage for a potential reversal. Typically, reversals happen after periods of consolidation, and the ongoing descending trend channel aligns with this pattern.

Bullish responses have occurred whenever prices dipped into the channel’s demand zone; however, recent attempts by sellers to push prices back into this zone have faltered, indicating growing bullish momentum.

As of now, both the Relative Strength Index (RSI) and Chaikin Money Flow (CMF) remain below neutral, pointing towards capital outflows. Still, a bullish divergence in the RSI suggests an underlying imbalance that could lead to price increases.

Source: TradingView

The expansion of the RWA sector on Arbitrum could significantly influence the market dynamics. Robinhood reported plans to extend its offering of over 800 tokenized stocks in Europe onto the L2 chain. They aim for complete DeFi interoperability by 2026, which could be when we start seeing impacts on price movements and on-chain activities as Robinhood attracts its roughly 23 million users to leverage Arbitrum for accessing these tokenized assets.

The current TVL for tokenized RWAs on Arbitrum is $490 million, and this number could rise following Robinhood's entry. The overall market cap of RWAs on ARB, now at $1.026 billion, is also expected to increase.

Source: Dune

It's important to note that while institutional involvement like Robinhood can take time before it tangibly affects the market, the long-term impact is anticipated to be substantial. Presently, ongoing market weakness continues to pose challenges for increased activity and asset prices.