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Arbitrum Price Prediction as $1 Billion ARB Proposal Goes Wrong – Here’s Where ARB is Heading Now

John Isige
Last updated: | 3 min read
Arbitrum price prediction

Following a much-hyped airdrop, ARB surged to an all-time high of $11.80, only to experience a sharp drop – currently trading at $1.21, reflecting a significant 90% decline from its peak.

This massive pullback is mainly attributed to an overwhelming selling pressure caused by the ‘buy the rumors sell the news narrative.” Investors positioned themselves for the March 23 airdrop but started dumping ARB tokens immediately.

In the last 24 hours, Arbitrum price lost another 5% although its trading volume is still above the 1 billion mark after increasing by 80%, in the same period.

The Arbitrum Foundation Races to Save First ARB Proposal

Over the weekend, the ecosystem’s inaugural governance proposal, which aimed to allocate 750 million ARB tokens (valued at approximately $1 billion) to the Arbitrum Foundation, encountered significant hurdles. 

The foundation planned to direct these tokens towards a “special grants” program designed to boost growth on the layer 2 solutions protocol, Arbitrum.

However, the proposal, dubbed AIP-1, has been met with controversy. It grants the Arbitrum Foundation full discretion in allocating the nearly $1 billion sum, excluding ARB token holders from the decision-making process. 

This centralization has raised concerns, as the special grants program would be subjected to a “full on-chain governance” procedure, enabling token holders to guide the ecosystem’s direction.

Arbitrum’s AIP-1 is a Ratification, The Foundation Clarifies

The Arbitrum Foundation faced pressure to clarify decisions made concerning the proposal and other issues, which were undertaken without input from the community.

In explaining the ratification of AIP-1, the foundation assured members that prior to the decentralized autonomous organization assuming control, certain decisions and actions were essential for the ecosystem’s success. 

They emphasized that all actions were executed in good faith, with the singular objective of ensuring Arbitrum’s success and competitive standing among its peers.

For instance, the Foundation explained its role in initiating and streamlining the decision-making process to circumvent critical operational questions such as, “who hosts the various governance forums where these discussions occur,” as well as broader questions like, “who kicks off governance.”

The Foundation acknowledged its lack of clear communication with the community, stating, “the proposal was intended to act as a ratification of the initial setup of both the Arbitrum DAO and the Foundation that has been created to serve the DAO.” 

Moreover, the Foundation admitted it had not informed the community about key decisions made earlier.

“The establishment of an initial distribution of tokens to the Foundation is a normal course of practice in setting up ecosystems like Arbitrum, and this was always the intent when AIP-1 was submitted for ratification concurrently with the announcement of the Arbitrum DAO,” the Foundation explained.

While standing firm with the decisions made, the Arbitrum Foundation assured the community that ARB “is unique in that it is the only one among its peers in which the DAO on-chain currently controls the vast majority of the community tokens.”

Regarding the massive $1 billion grant in ARB tokens, which is set to occur off-chain, the Foundation argued that allocating “a significant token budget” is common practice and helps prevent “voter fatigue,” which many view as an effective approach for smaller grants.

The Foundation emphasized that the $1 billion special grants proposal is crucial for the Arbitrum ecosystem’s success.

Arbitrum Price Still Overwhelmed – Where to Next?

Arbitrum’s price is trading at $1.21 after bouncing off support at $1.1o. 

The newly airdropped token was expected to stretch the leg to $1.4, where it would have activated a 25% double-bottom pattern breakout to $1.73, but it appears to have lost momentum.

Arbitrum price prediction

For now, short-term support at $1.20 would matter most to the bulls and the bears alike. If this support is defended at all costs, Arbitrum price may gain momentum to $1.40 and $1.733 as buyers build confidence in its recovery.

However, a sustained break below the same support level would mean a spike in overhead pressure, with the possibility of ARB retesting the major $1.10 support area.

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