The native token of Ethereum’s Layer 2 protocol, Arbitrum has increased by nearly 12% to trade at $1.335 on Thursday. ARB respected support in the demand area between $1.1 and $1.15, following the airdrop on March 23.
A sell-the-news narrative saw investors dump ARB tokens in the wake of a massive spike to $9. Despite a successful airdrop, the Arbitrum Foundation rubbed shoulders the wrong way with the community after allocating 700 million ARB tokens from the decentralized autonomous organization (DAO) Treasury off-chain and without approval.
Community Demands Arbitrum Foundation Transfer Back The 700M ARB
The Arbitrum community has started a new proposal demanding the Arbitrum Foundation transfer back the 700 million ARB tokens.
Although the Foundation issued a statement backing its actions in the AIP-1 proposal, the community says “what happened was a clear overreach of the DAO’s power of treasury resources.”
According to the new proposal, the Arbitrum Foundation does not have the power to solely make decisions affecting the entire ecosystem and requests all budget planning to stop until the process is approved.
“This is a symbolic gesture to demonstrate that the governance holders ultimately control the DAO, not the Arbitrum service provider nor the Foundation,” the community outlined in the AIP-1.05 proposal.
The community also argues that all the Arbitrum networks; Arbitrum One and Arbitrum Nova have been decentralized since March 16, 2023, when they were transferred to a newly formed Arbitrum DAO.
Henceforth, they ceased being under the absolute control of the Arbitrum Foundation, as the DAO now has full oversight of the treasury’s resources.
The skirmish between the community and the Arbitrum Foundation continues unabated three weeks after the airdrop.
On April 2, the foundation said AIP-1 was not a proposal but a ratification and attributed the botched initial attempt at governance to communication challenges—and poorly expressed decisions.
The Foundation later released another set of new improvement proposals meant to reestablish communication with the community, including AIP-1.1 and AIP-1.2 but ARB holders were adamant.
“The foundation has unilaterally been allocated $750M tokens from the DAO that was not approved by the governance token holders. Any funds must be returned until it has been properly allocated by the DAO and the DAO only,” the community stated via the proposal.
Arbitrum Bulls Face Their Biggest Hurdle Yet at $1.35
After holding firmly to support at $1.1, ARB resolved to consolidate losses around the pivotal $1.2 level. Attempts to weaken resistance along the descending trendline failed a couple of times before breaking out on Thursday.
Now, all eyes are glued on $1.35, an immediate resistance that must come out of the way if Arbitrum price is to keep the uptrend in place.
A buy signal from the Moving Average Convergence Divergence (MACD) adds credence to the optimistic outlook.
However, traders who bought ARB at the falling trendline breakout point, highlighted by the 100-day Exponential Moving Average (EMA) (line in blue) at $1.2357 on the four-hour chart, may want to book their profits if ARB fails to break above $1.35 in the next few sessions.
Investors and analysts like Mac, who has more than 392k followers on Twitter are optimistic about the future of Arbitrum both as a token and an ecosystem.
The token’s volume is starting to pick up after being on a steady decline for more than two weeks. ARB has posted over $880 million in trading in 24 hours, according to data from CoinMarketCap.
It “looks like the market maker is preparing it for a pump,” Mac said in his latest analysis. One of two scenarios will play out heading into the weekend.
The first likely outcome may open the door for a retracement to $1.2, a crucial support area if resistance at $1.35 overwhelms Arbitrum price.
On the other hand, we cannot rule out a potential breakout to $1.5 and $2, respectively. However, for this scenario to play out, Arbitrum price must break and settle above the stubborn $1.35 resistance.
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