Arbitrum (ARB) is ‘fundamentally undervalued,’ analyst says

Arbitrum price has gained by more than 80% in the past 30 days, becoming one of the altcoins to record notable gains as Bitcoin (BTC) smashed the $100,000 barrier.

The ARB price reached a high of $1.23 on December 6, the highest level for the cryptocurrency since May.

Gains over the past week currently stand at over 14%, while daily trading volume has increased nearly 8% to more than $699 million.

What next for Arbitrum price?

While the ARB token has pared some of the gains with a 24-hour slip of about 5%, Mechanism Capital partner Andrew Kang says Arbitrum is largely undervalued.

Kang sees Arbitrum’s price as “a fraction of” other top altcoins such as Tron (TRX), Sui (SUI) and Avalanche (AVAX).

However, the rollup chain that offers scalability for Ethereum, is way higher than the above coins in terms of trading volume and total value locked.

“$ARB has had a great rally but is still fundamentally undervalued.

Trades at a fraction of Sui, Avax, Tron, etc but has them beat on volume and TVL by multiples (even excluding HL activity),” Kang posted on X on Monday.  

Per DeFiLlama data, the Arbitrum TVL stands at $4.6 billion – twice that of Sui and Avalanche.

As Invezz recently highlighted, Arbitrum's TVL is much higher on L2 Beat, with the inclusion of Hyperliquid data.

Kang points to this in an X post.

Key drivers of ARB price

Amid this is the massively positive sentiment around Arbitrum, including from institutional buyers.

The project has also recently partnered with popular trading app Robinhood, highlighting the potential for a listing and further traction.

The overall bullish picture for the altcoin is also down to ecosystem growth, which includes the Stylus upgrade, gaming and interoperability research.

Kang sees these as likely drivers of growth for Arbitrum.

He opines;

A look at Arbitrum’s other metrics shows a significant increase in daily active addresses after a recent dip.

Data from IntoTheBlock indicates the number of active addresses has increased from 14.2k to more than 22.5k as of December 8.

This follows the dip that saw total active addresses shrink by 50% from 28k on December 4.

However, new addresses and zero balance addresses indicate continued declines, even as the number of holders in profit remain at only 40%.

With 39% of holders under water and 21% at the money, gains could see some profit taking.