Arbitrum's DeFi Activity Increases! Why is the ARB Price Down?

2025-08-18

The cryptocurrency market is full of surprises. One of the most puzzling recent developments is that Arbitrum (ARB), despite showing explosive growth in DeFi activity, has seen its price decline.

Investors are left wondering: how can an ecosystem beat Ethereum in user adoption and still face selling pressure?

This article dives into the reasons behind this paradox, exploring Arbitrum’s fundamentals, price analysis, and future price prediction.

Arbitrum’s DeFi Growth Surges Beyond Ethereum

Arbitrum is a Layer-2 scaling solution for Ethereum, designed to make transactions faster and cheaper.

In August 2025, Arbitrum reached a milestone: it surpassed Ethereum in daily active DeFi users. This is a big achievement considering Ethereum has dominated the decentralized finance space for years.

Arbitrum Defi TVL.png

According to DeFiLlama data, Arbitrum’s Total Value Locked (TVL) climbed close to $5.59 billion, approaching all-time highs. Developers are increasingly building on Arbitrum thanks to lower gas fees, and new protocols are drawing fresh liquidity.

More users mean higher fees paid, more dApps being deployed, and stronger long-term ecosystem resilience. On paper, these fundamentals should support higher ARB prices. But the market tells a different story.

Why is Arbitrum’s Price Down?

Despite bullish fundamentals, ARB price has slipped by more than 10% over the last week. Several reasons explain this contradiction:

Token Unlock Pressure

In mid-August, 92.65 million ARB tokens (worth ~$47 million) were unlocked, adding 1.8% to circulating supply. Each token unlock creates potential sell pressure as early investors or insiders take profits. Historically, ARB unlocks have led to 10–15% corrections.

Weak On-Chain Activity Metrics

While TVL is holding, other network stats fell sharply:

Transactions dropped by 4.72%
Total transaction fees fell 74%
New addresses declined by 46%
This slowdown suggests users are temporarily fading activity on Arbitrum.

Market-Wide Leverage Imbalance

Derivatives data shows $41.3 million in long positions against only $18.2 million in shorts. This imbalance increases the risk of liquidation cascades if ARB dips further, accelerating price declines.

Broader Crypto Market Correction

The entire crypto market dipped by 1.75%, pulling ARB down alongside peers like Optimism (OP).

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Technical Price Analysis: Key Levels to Watch

From a technical standpoint, ARB’s price action remains in a fragile state:

Support Zone: $0.48 – Losing this level could open a drop to $0.43 or lower.
Resistance Zone: $0.60 – A breakout here could renew bullish momentum.
Fibonacci Target: $0.96 – If the uptrend resumes, this is the next bullish extension level.

Indicators like the MACD turning red and Bollinger Bands widening point to increased volatility. However, as long as ARB holds above the $0.48 flip zone, the broader uptrend is not invalidated.

Opportunities Ahead for Arbitrum

Despite short-term pain, there are reasons to remain optimistic about Arbitrum:

ArbOS 40 Upgrade

The June 2025 “Callisto” upgrade introduced Ethereum-aligned features like account abstraction (EIP-7702) and BLS signature aggregation, making Arbitrum more attractive for developers.

DAO Treasury & Institutional Moves

Arbitrum DAO holds over 22,500 ETH (~$100M), aligning closely with Ethereum’s ecosystem. Partnerships with Robinhood (tokenized equities) and Franklin Templeton (RWA allocations) highlight institutional confidence.

Resilient DeFi Growth

While transactions dipped, TVL growth shows that liquidity providers and whales still trust Arbitrum’s ecosystem. Whale accumulation and outflows from exchanges also support a long-term bullish view.

Arbitrum Price Prediction

Looking ahead, here’s how analysts view ARB’s trajectory:

Short Term (2025): ARB likely to trade between $0.43–$0.60, with volatility driven by token unlocks.
Mid Term (2026): If ecosystem adoption continues, ARB could revisit $1.00 levels.
Long Term (2030): With DeFi expansion and Ethereum alignment, ARB may test $2.00–$2.50, provided dilution pressures are managed.

Conclusion

Arbitrum finds itself at an inflection point. Its DeFi growth surpassing Ethereum shows enormous potential, but token unlocks and weak on-chain usage are weighing down ARB price in the short run.

For long-term investors, these dips could present accumulation opportunities. For traders, watching the $0.48 support and $0.60 resistance is crucial.

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FAQ

Why is Arbitrum’s price down despite DeFi growth?

The main reasons include token unlocks adding selling pressure, a decline in daily transactions, and an imbalance in leveraged positions that led to liquidations.

What makes Arbitrum important in the DeFi ecosystem?

Arbitrum offers lower transaction costs, faster speeds, and has recently surpassed Ethereum in daily active DeFi users, making it a leading Layer-2 solution.

What is the ARB price prediction for 2025?

Analysts expect ARB to fluctuate between $0.43 and $0.60 in the short term, with potential upside toward $1.00 if DeFi momentum continues.

Could Arbitrum reach $2 in the long run?

Yes, if ecosystem adoption grows and token unlock pressures ease, ARB could test $2.00–$2.50 by 2030.

Why is Arbitrum’s DeFi adoption growing so fast?

In August 2025, Arbitrum surpassed Ethereum in daily active DeFi users due to lower fees, faster confirmation times, and strong developer adoption. Its Total Value Locked (TVL) has also reached close to $5.59 billion.

Arbitrum

Disclaimer: The content of this article does not constitute financial or investment advice.

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