Journalist
Posted:
- The Ethereum co-founder praised Arbitrum for becoming a Phase 1 rollup.
- The price of ARB rose 22% in 24 hours, indicating a price towards $2.
A few hours after Vitalik Buterin gave Arbitrum [ARB] a good figure because it is the only phase 1 rollup, the price of the original token increased by 22%. Buterin, co-founder of Ethereum [ETH]had a conversation about the L2 on Warpcast.
According to him, Arbitrum is moving to phase 1 resources that the project has become the first L2 to move towards true decentralization.
Being a Phase 1 combination, Arbitrum has met the five requirements to become fully decentralized. One of these conditions includes allowing users to leave the site without the assistance of permission operators.
Another is having a completely tamper-proof system.
For context, tamper-proofing enables on-chain scalability while also acting as protection against incorrect state transitions. In his statement, Buterin noted that he would be happy if other rollups could reach phase 1 by 2024.
He wrote:
“I’m very pleased that we have one unequivocal Phase 1 rollup this year (and a few more very close to Phase 1 rollups). True decentralization. Let’s get to ten Phase 1 rollups in the next year, and some degree of sequencer decentralization.”
AMBCrypto observed the graph shared by the Ethereum co-founder. According to the details, it turned out that the OP Mainnet, zkSyncn Era and Base were in phase zero.
This means that the projects only had one more requirement to become a Phase 1 combination.
Source: Vitalik Buterin via Warpcast
How did ARB respond?
At the time of writing, ARB’s price was $1.59. Also, the price increase would come as a relief to ARB holders who have had to endure encouraging price action for early adopters since the Arbitrum Foundation AirDrop.
Although ARB is 86% lower than its launch price, the 76.45% increase in 90 days implies that the token could be on its way to a new high. Another factor driving ARB’s move is ETH.
At the time of writing, ETH had broken out and its value was changing hands around $2,389.
Furthermore, Arbitrum’s fundamentals as an Ethereum L2 mean that there is a good chance that the ARB will be highly correlated with ETH. On the derivatives side of the market, AMBCrypto took into account the ARB’s Open Interest.
With the help of Coinglass data, the Open Interest had done just that increased by 29% in the last 24 hours. Open Interest is the number of outstanding futures contracts linked to a cryptocurrency.
When Open Interest increases, it implies an increase in open long/short positions. However, a decrease in Open Interest indicates a decrease in liquidity allocated to contracts.
Source: Coinglass
Read Arbitrums [ARB] Price forecast 2024-2025
Given the price action, the increase in Open Interest could cause a continuation of the uptrend. So it is not out of place to predict a rise to $2 for ARB. However, market participants should beware of ETH’s price action.
Should ETH slow its momentum, ARB could do the same. At the same time, if ETH moves towards $2,500, ARB could cross the $2 mark.