Arbitrum (ARB) is a newly launched token for Ethereum (ETH) scaling solution, and it has already become the focus of internet hype. However, a popular crypto analyst has warned traders to be realistic about the possible future price of the token. In a new YouTube video, the anonymous host of InvestAnswers guides his 443,000 subscribers through a realistic view of the ARB token market.
The InvestAnswers host says that traders should be cautious about the “false hopium” of the cryptocurrency market. He argues against the possibility of ARB skyrocketing to $100, saying, “If that were to happen, Arbitrum would have a full diluted market cap of $1.3 trillion. It’s never going to be worth that, okay? Just put things in perspective. Be careful what you read and do your numbers on the back of a napkin, don’t just say, ‘Oh, I can buy something for a dollar and sell it for $100.’ No, it’s not going to happen.”
According to the InvestAnswers host, ARB has a fully diluted market cap of over $13 billion, which is already greater than the fully diluted market cap of other established large-cap altcoins such as Polygon (MATIC) and Solana (SOL).
The InvestAnswers host is concerned that ARB is heavily centralized and heavily concentrated in the hands of large investors. He also points out that ARB still has 87.2% of its token circulation left to be unlocked. This means that there are many more tokens that can be sold, which could lead to a significant dip in the token’s value.
Arbitrum just kicked off its first airdrop last week, distributing 12.75% of its token supply. The asset rapidly plunged from trading around $5.04 at launch to around $1.19 only a few hours later. At the time of writing, ARB is trading for $1.16.
InvestAnswers strongly advocates that traders should be realistic about the market and not be swayed by rumors, hype, or hopes. He says that traders should do their own research and analysis before investing in a token or cryptocurrency.
Token supply and ownership concentration are important factors to consider when trading cryptocurrencies. If a token has a high percentage of its float still to be unlocked, it may be subject to volatility in the short term. Therefore, traders should pay close attention to how many tokens are in circulation compared to how many tokens are still to be unlocked.
Ownership concentration is another crucial aspect to consider when trading tokens. If a token is heavily concentrated in the hands of a few large investors, then any movement of these investors may significantly drive the token’s price up or down. Hence, traders should also consider the distribution of the tokens while trading.
While cryptocurrency traders may be excited about the potential of ARB, it is essential to be aware of the token’s risks and limitations. Given InvestAnswers’ warning, traders should be cautious and realistic regarding ARB’s value and future potential. It is important to remember that no cryptocurrency or token is a guaranteed investment, and market movements may be unpredictable.
In conclusion, traders should approach cryptocurrency with caution and take the time to do their own research before investing. While the hype of the cryptocurrency market can be overwhelming, traders must be mindful of the long-term impact of their decisions. By taking the time to research and analyze the available information, traders can make informed and strategic investments that will generate positive returns in the long run.