Arbitrum rebounds after a prolonged downtrend. The altcoin broke out of a bearish channel and jumped to a two-week high of $0.085 before slightly retracing.
At press time, ARB was trading around $0.085 after rising by 11% on the daily charts. Over the same period, the altcoin’s volume jumped 163% to $162 million, indicating strong market participation.
Why Arbitrum rebounds on Robinhood Chain fee split
ARB’s rebound was fueled by positive market news. Specifically, Arbitrum developer Steven Goldfeder announced that 10% of fees collected on Robinhood Chain and other Arbitrum L2s will be directed to the Arbitrum ecosystem.
He also added that 8% goes to the tokenholder-controlled treasury and 2% for development. Finally, 100% of fees collected on Arbitrum One will go to the Arbitrum treasury. Consequently, this tokenomics approach is designed to counter the market inflation that has been weighing heavily on ARB.
Can Robinhood Chain’s fees offset market dilution?
Since going live, Robinhood Chain has experienced massive growth, reaching record-breaking usage levels. For example, Robinhood’s DEX trading volume surged to a record high of $560 million on July 8. Furthermore, this volume was driven by over 140K new addresses, suggesting extensive demand.
As trading volume climbed, chain fees and revenue surged. Specifically, DeFiLlama data shows App Fees reached $2.36 million on July 8 and $2.12 million on July 9.
For Arbitrum, rising fees offer a lifeline as the team seeks to offset market inflation. Arbitrum remains extremely inflationary due to its monthly unlocks. In fact, this July, 92.63 million ARB (approximately $7.6 million) will enter circulation after unlocks.
With the team promising to spend Robinhood-generated funds on the ecosystem, those funds could at least reduce pressure. Nevertheless, this means the Robinhood Chain must generate $8 million monthly for Arbitrum and invest it back. For now, that remains far-fetched, especially in the short term. Therefore, the inflationary threat remains for ARB.
Can ARB’s current momentum hold?
Arbitrum rebounded strongly, as demand for the asset recovered. Buyers were incentivized by positive ecosystem developments.
Consequently, the altcoin’s Relative Strength Index climbed to 60 as of writing, edging into bullish territory. This signaled a strong buyer comeback, further strengthening upside momentum.
Historically, strong market demand has preceded better price performance. Therefore, if the Robinhood-driven narrative holds the market, Arbitrum is likely to make further gains, eyeing the $0.09 resistance level.
However, if the promised ecosystem investment fails to absorb the pressure, the momentum will fade. In that case, ARB could possibly fall to $0.072.
