Sometime in march this year, the foundation airdropped some of its users its ARB token and announced plans to switch its decision-making process to a decentralized governance plan under the Arbitrum Improvement Proposal or the AIP-1.
This new governance plan is intended to increase involvement and engagement within the Arbitrum community by allowing token holders to have a role in the platform's growth.
However, before the launch of the plan, the foundation had set some things in motion. This included allocating more than 7% of the DAO's initial token supply to itself.
In the end, a wave of panic swept through the Arbitrum community when rumours of the foundation dumping the tokens hit the news.
In response to this bit of news, the Arbitrum token (ARB) has tanked by more than 10% over the weekend and is still struggling from a daily perspective.
This is despite the vote ending on April 3 and over 70% of its voters already voting against it.
According to data from CoinMarketCap, Arbitrum is bearish over the last day and has tanked by more than 6%.
According to the crypto price tracking platform, the cryptocurrency started the day at an opening price of $1.14 after tanking 21% throughout the weekend from a $1.44 high.
The price of the cryptocurrency has so far normalized, rising to a local high of $1.26 before falling again over the last 24 hours, to the $1.20 zone where it now sits.
Overall, from its $1.44 high on Friday last week, the cryptocurrency is still down by a whole 18% and things don't look so good for it.
Not yet, at least.
Ever since hitting a high of around $1.6 on launch, ARB has been overall bearish and has been making lower lows.
Zooming out to the 30-minute chart as shown above, we can see that the weekend dump took the cryptocurrency below a key resistance level around the $1.22 – $1.18 zones.
This alone, is cause for alarm, because the ARB market's trend is bearish, and the cryptocurrency's price has just gone below a strong support zone.
This begs the question of "how" or "when" the cryptocurrency might break through this support to the upside.
To better understand what is going on here, and make a prediction, a descending channel can easily be drawn on the $ARB chart.
Asides from the glaring descending channel, we can see several other things in play here.
First of all, over the weekend, the 50-period moving average (purple line) crossed below the 200-period moving average (green line).
This signifies a death-cross and may indicate that $ARB is heading for further bearishness.
Furthermore, despite the huge dip over the weekend, from the cryptocurrency's $1.44 high on Friday, the RSI only indicates slightly oversold conditions, indicating that there is still more room to fall.
Summing up the signs, we have that:
Judging by these, it is safe to assume that $ARB is currently bearish, it may be bearish for a while, and there is a strong possibility that this bearishness takes the cryptocurrency into a retest of the lower resistance of its descending channel.
In summary, if the bulls are unable to push the cryptocurrency's price above the $1.22 zone anytime soon, the bears will take it as an opportunity to sink the price lower.
In this scenario, a dip to the bottom of the channel would constitute a 16.5% decline and will take the price straight down to the $1 zone.
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