Markets
Arbitrum’s market capitalization has grown, but the ARB token is near an all-time low
Even as its price has plummeted over the past year, ARB’s market capitalization has grown by more than 75% to $2.23 billion, following the heavy token unlocking. The remaining 36% of Arbitrum’s total supply will be unlocked over the next three years.
The unlocking of Arbitrum tokens in March kicked off an ARB unlock of approximately 108 million every month for the next three years.
(Photography)
Posted June 18, 2024 at 4:50pm EST.
Arbitrum’s governance token is just cents away from its all-time low, CoinGecko data shows.
Over the past year, the price of the ARB has fallen 24% to 77 cents, three cents away from its all-time low of 74 cents. While the ARB is in recession, nearing its lowest level ever, the cryptocurrency’s market capitalization has grown substantially over the same period. ARB’s market capitalization was about $1.27 billion a year ago and has since jumped more than 75% to $2.23 billion.
The market capitalization of any cryptocurrency is defined by the number of total tokens in its circulating supply multiplied by the price of a single token. Therefore, the market capitalization increases in some ways; a common way is for the circulating supply of a token to remain the same, while its price increases.
However, in light of a declining price, another way to see the market capitalization grow as is the case with the Arbitrum governance token is for the circulating supply of the token to increase more than the price collapse. As of this writing, Arbitrum’s circulating supply stands at approximately 2.9 billion tokens.
To know more: Over $740 million in tokens to unlock in the next 30 days
Token unlocks for the next three years
The inverse relationship between ARB price and market capitalization stems from the fact that Arbitrum has seen a number of major token unlocks, referring to the release of previously frozen tokens to prevent large-scale dumping by investors during the early days of a project.
Data from blockchain research company Messari Shows that Arbitrum initiated substantial token unlocks in March, when 1.13 billion ARB tokens were unlocked, the largest of L2 in the last year.
The March release kicked off an release of about 108 million ARBs each month “for the remaining three years,” according to the network governance documents, freeing approximately 3.6 billion more tokens on top of the current unlocked token total of 6.4 billion. At current prices, each monthly unlock excluding March 2024 is worth $83 million.
The remaining unlocks are earmarked for the Arbitrum Foundation, Offchain Labs, and investors according to Messari.
Arbitrum’s ARB token has fallen about 64% since reaching a local high of over $2.15 in March, when the first major token unlock after the airdrop occurred.
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