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Arbitrum’s 93M Token Release May Impact ARB Price, Investors Warned

The Essentials in Brief

Arbitrum, a leading Layer-2 scaling solution for Ethereum, is facing a significant release of 93 million tokens, mainly attributed to team members and investors. This development could potentially affect the price of the ARB token, especially after the cryptocurrency has fallen by 26% since the last release in March. With a planned monthly release over the next three years, market volatility and price pressure could increase.

Insight into the Upcoming Token Release

The release of nearly 93 million ARB tokens, currently valued at about $136 million, is part of a set schedule that extends over the next three years. These tokens belong to the shares of Arbitrum team members and investors, of which about 25% have already been released in March. Token releases in the crypto world are often associated with an increased willingness to sell, as they increase the supply on the market and thereby potentially exert pressure on the token price.

ARB Price Reaction to the Last Release

The last major release on March 16 led to a 26% price drop in the ARB token, with the price already starting to fall days before the event. This suggests a market reaction characterized by uncertainty and selling pressure. Data from Santiment show that the number of large transactions (over $100,000) increased shortly before and after the release, further intensifying the selling pressure. Interestingly, however, the share of large whale positions also increased, suggesting that some investors saw the lower prices as a buying opportunity.

Our Assessment

The upcoming release of ARB tokens presents both a challenge and an opportunity. While increased volatility and potential price pressure can be expected in the short term, long-term oriented investors could see the lower prices as an entry point. It is important that investors closely monitor market developments and base their investment decisions on sound analyses. The dynamics of the crypto market require a careful strategy, especially with regard to events like token releases that can trigger significant price movements.

Sources

• AMBCrypto
• Santiment