Dead Cat Bounce or Full Blown Recovery Next?

The recent surge in Ethereum (ETH) price has had a positive impact on its layer two (L2) ecosystem, particularly on Arbitrum (ARB). Whale investors have shown renewed interest in altcoins, leading to a bullish sentiment in the crypto market. Bitcoin (BTC) price has also rebounded above the crucial support level of $92k, further fueling the optimism in the market.

Over the past week, ARB price has seen a significant rally of over 18%, reaching around 33 cents during the mid-North American trading session on Wednesday, April 23. Despite being stuck in a downtrend for most of the year, ARB price recently broke out of a falling trend, signaling a potential macro reversal. This pattern is reminiscent of a similar reversal that occurred back in September to November 2024, hinting at a possible bullish breakout.

The daily Relative Strength Index (RSI) for ARB has crossed above the 50% level for the first time in 2025, indicating a shift towards bullish sentiment. Additionally, the daily Moving Average Convergence Divergence (MACD) indicator is on the verge of turning bullish. If the positive momentum continues, ARB price could target 47 cents in the short term and $1.2 in the coming months.

Taking a closer look at Arbitrum’s fundamentals, the network has evolved into a robust web3 ecosystem on the Ethereum blockchain over the past year. Several DeFi protocols have been deployed on the Arbitrum network, leading to a total value locked (TVL) of approximately $2.22 billion and a stablecoins market cap of around $2.86 billion. However, the network faces stiff competition from Base Network, backed by Coinbase Global, which boasts a TVL of $2.7 billion and a stablecoins market cap of $4.11 billion, according to Defillama data.

In conclusion, the resurgence of crypto FOMO and the bullish breakout in ARB price indicate a potential parabolic rally in the near future. With positive technical indicators and a strong fundamental ecosystem, ARB is poised for a significant price increase in the coming months. Investors should keep a close eye on this promising altcoin as it continues its upward trajectory.