<div id="readability-page-1"><p>Arbitrum [ARB] has not escaped the broader market downturn, despite improving network fundamentals. Arbitrum, a leading Layer 2 blockchain with its native token ARB, experienced a sharp pullback that resulted in a 10% loss over the past 24 hours, at press time.</p><p>What makes the recent pullback notable is that it was not solely driven by perpetual futures traders, as is often the case. Instead, on-chain capital rotation played a significant role in ARB’s underperformance.</p><h2><strong>Fundamentals paint a contrasting picture</strong></h2><p>From a fundamental standpoint, activity on the Arbitrum chain over the past 24 hours suggested the potential for a rebound rather than a decline. However, price action told a different story.</p><p>During this period, both Daily Transactions and Daily Active Users rose simultaneously. Data from Artemis shows that Daily Active Users climbed to 4.3 million, while active addresses reached 162,700.</p><p>This translates to an average of approximately 26 transactions per user, signaling strong network engagement.</p><div id="attachment_572527"><p><img src="https://imageproxy.pbkrs.com/https://ambcrypto.com/wp-content/uploads/2026/02/Arbitrum-Transacting-Users.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="1920" height="800" original-src="https://imageproxy.pbkrs.com/https://ambcrypto.com/wp-content/uploads/2026/02/Arbitrum-Transacting-Users.jpeg"/></p><p id="caption-attachment-572527">Source: Artemis</p></div><p>At first glance, this level of activity appears fundamentally bullish. Increased on-chain transactions typically support network utility and, by extension, token demand, as the native asset often facilitates ecosystem interactions.</p><p>However, deeper analysis reveals that while ARB may have seen modest utility growth, significant capital outflows undermined the broader outlook.</p><h2><strong>Capital outflows shift market confidence</strong></h2><p>The bearish tilt emerged primarily from substantial on-chain outflows. Artemis reports that Arbitrum recorded the largest bridged net outflow among major chains in the past day.</p><p>Approximately $56.9 million worth of capital exited the network and rotated into other chains, a common sign of liquidity reallocation within the crypto market.</p><p>Two ecosystems benefited most from this movement: Ethereum [ETH] and Hyperliquid [HYPE]. Ethereum absorbed roughly $34.7 million, accounting for 59% of the outflows, while Hyperliquid attracted about $17.7 million, representing 30.59%.</p><div id="attachment_572528"><p><img src="https://imageproxy.pbkrs.com/https://ambcrypto.com/wp-content/uploads/2026/02/Screenshot-2026-02-20-at-11.01.13-AM.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="1548" height="996" original-src="https://imageproxy.pbkrs.com/https://ambcrypto.com/wp-content/uploads/2026/02/Screenshot-2026-02-20-at-11.01.13-AM.png"/></p><p id="caption-attachment-572528">Source: Artemis</p></div><p>Despite these inflows, price action for both assets remained relatively neutral, indicating that the capital migration did not immediately trigger strong upward momentum.</p><p>Nonetheless,<span><span>this</span>rotation reflects a shift in market confidence away from ARB and toward rival ecosystems.</span></p><p><span>Community Sentiment data from CoinMarketCap underscores this trend, with bullish conviction for ARB falling from 83% on the 18th of February to 48% at press time. The decline in sentiment closely mirrors ARB’s recent price drop.</span></p><h2><strong>Derivatives market amplifies downside pressure</strong></h2><p>While spot outflows initiated the weakness, derivatives markets appear to have intensified it.</p><p>At the time of writing, data from CoinGlass indicated that the OI-Weighted Funding Rate turned negative, printing at -0.0056%.</p><p>A negative Funding Rate suggests that short traders are paying longs, meaning that a growing share of Open Interest (OI) is positioned for further downside.</p><p>In addition, approximately $3 million in fresh liquidity entered the derivatives market. Rather than supporting price stability, this capital largely reinforced short exposure, increasing downside pressure on ARB.</p><div id="attachment_572529"><p><img src="https://imageproxy.pbkrs.com/https://ambcrypto.com/wp-content/uploads/2026/02/Screenshot-2026-02-20-at-11.05.05-AM-scaled.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="2560" height="887" original-src="https://imageproxy.pbkrs.com/https://ambcrypto.com/wp-content/uploads/2026/02/Screenshot-2026-02-20-at-11.05.05-AM-scaled.png"/></p><p id="caption-attachment-572529">Source: CoinGlass</p></div><p>The imbalance between long and short liquidations further highlights the prevailing bearish bias. Over the past 24 hours, for every $1 lost by short traders, long traders lost approximately $37. This sharp divergence underscores the extent to which bullish positions were aggressively unwound.</p><p>From a technical perspective, the current structure favors sellers. Price continues to decline while trading volume rises, a pattern that often reflects strong distribution. Historically, this divergence between falling price and rising volume tends to precede further downside.</p><p>For now, both spot-driven capital rotation and derivatives positioning suggest that bearish momentum remains elevated, leaving the possibility of additional declines in ARB firmly in play.</p><hr/><h2>Final Summary</h2><ul><li><em>Arbitrum recorded a surge in transactions and user activity, with little impact on the ARB token. </em></li><li><em>On-chain liquidity outflows reached $56.9 million, while derivatives markets channeled $115 million largely into short positions.</em></li></ul></div>

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<p>Arbitrum (ARB) faced a significant downturn, with a 10% loss in 24 hours, despite increased network activity. Approximately $56.9 million exited the network, primarily moving to Ethereum and Hyperliquid, indicating a shift in market confidence. Community sentiment for ARB dropped from 83% to 48%. The derivatives market further pressured ARB, with a negative funding rate suggesting a bearish outlook. Overall, while user engagement rose, the capital outflows and derivatives positioning indicate potential for further declines in ARB's price.</p>

- Arbitrum [ARB] has faced a 10% loss in the past 24 hours, despite increased network activity, with rising daily transactions and active users.  
- Significant on-chain capital outflows of approximately $56.9 million were redirected to other chains, notably Ethereum and Hyperliquid, reflecting a decline in market confidence.  
- The derivatives market has exacerbated bearish momentum, with negative funding rates indicating an increased focus on short positions, supporting the likelihood of further declines for ARB.

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$56.9M exits Arbitrum in 24 hours – Is ARB’s rebound at risk?