Arbitrum (ARB) at Risk: Assessing the Fallout from Curve Finance Hack

Arbitrum (ARB) price has consolidated within the $1.18 – $1.20 territory over the past week. But Finance now warns of a potential exploit on Arbitrum’s tricrypto liquidity pool. How will ARB investors react? 

On July 30, popular DeFi lending platform Curve Finance suffered a $50 million hack after a malicious actor executed a reentrancy attack on a number of liquidity pools. 

After investigations, the Curve Finance team has of a potential exploit on Arbitrum’s tricrypto liquidity pool. While developers have not yet identified a profitable exploit on this Arbitrum LP, Curve’s team advised users to withdraw funds to avoid possible losses.

On-chain analysis examines the early reactions of Arbitrum investors to this warning and the potential price impact. 

Long-Term Investors Are Still Holding Firm Despite Curve Finance Warning 

According to on-chain data from Santiment, Arbitrum long-term investors are not yet showing any signs of panic. The chart below shows that the ARB Mean Coin Age has continued to trend upwards since Monday, July 31.

Remarkably, between July 16 and July 31, ARB Mean Coin Age increased by 28% from 166.82 to 213.62.

Mean Coin Age evaluates changes in the trading patterns of long-term investors. It is computed by dividing the number of days each coin has spent in their current addresses by the total number of coins in circulation.

This steady rise in Arbitrum Mean Coin Age indicates that long-term investors are still holding firm and consolidating their positions despite the recent exploit scare. 

Arbitrum Whales Invested $100 Million Within the Last Two-Weeks

Furthermore, Whale investors have also maintained a neutral disposition amid warnings issued by the Curve Finance team. 

On-chain data shows that the whales holding balances of 100,000 to 10 million ARB added 96 million coins to their wallet balances in the second half of July. And as of July 31, they have not shown any early signs of a potential sell-off. 

Will ARB price currently sitting at $1.18, the newly-invested 90 million tokens are worth $113 million. If the whales panic and offload a large portion of it, it could trigger an instant price correction. 

Also, strategic investors will closely watch the whales’ trading activity as more information regarding the Curve Finance hack filters through the media. 

ARB Price Prediction: Further Consolidation Around $1.20

As observed above, long-term holders and whale investors are currently maintaining a neutral stance amid the warning issued by the Curve Finance team. ARB will likely continue consolidating around the $1.20 territory if the exploit is quickly contained. 

In indication, the MVRV ratio confirms that the majority of holders that bought ARB in the last 30 days are currently holding profits of about 14%. Historical data suggests that many of them could keep holding until it reaches 20%, around $1.25.

But, if the bulls ignore the Curve Finance FUD, ARB could rally toward $1.30 before the bears get to regroup.

Yet, if the Curve Finance exploits spark a panic sell among Arbitrum holders, the bears can force a downswing below $1. However, at that point, investors could stop selling around $1.05 to avoid slipping into a net-loss position. 

Nevertheless, if that support level does not hold, ARB could drop toward $0.90.