Safe Bitcoin ETF: Is Now ETH Time? Arbitrum (ARB) and Optimism (OP) price increase
Ethereum Layer 2 solutions are on the rise. Arbitrum (ARB) and Optimism (OP), two major Layer 2 (L2) cryptocurrencies, have seen significant momentum over the past day.
According to data from CoinGecko, ARB rose to $2+, an increase of 13%, OP reached $3.9+, gaining 10%. The positive trend comes amid market turmoil following the confirmation of a key Bitcoin exchange-traded fund (ETF) decision.
New tech makes better transactions
Arbitrum and Optimism are developing solutions to Ethereum Layer 2 address scalability challenges by reducing gas fees and accelerating transaction speeds. This ensures a smooth user experience while maintaining the security of the Ethereum root chain. These protocols are part of the Optimistic Rollup using security mechanisms that prevent fraud based on scientific evidence.
In December, OP set a new record high of $4.1. ARB broke a key resistance level earlier this year to hit a new all-time high of $2.1. These two ecosystems have seen an increase in total value locked (TVL). According to L2Beat, TVL at Arbitram has skyrocketed more than 400% year-to-date, surpassing $10 billion. Meanwhile, Optimism follows closely behind with a $5 billion TVL.
While L2 matching solutions like Arbitrum and Optimism have increased in value, Ethereum (ETH) itself is ahead of the next major upgrade. The second-largest cryptocurrency surpassed $2,400, further fueling the potential approval of a spot Ethereum ETF following the green light for a bitcoin fund.
According to data from Defillama, Ethereum and Arbitrum dethroned Solana by gaining the top positions in DEX trading this week. While SOL is still more valuable than Arbitrum, ETH is currently flying higher.
What to expect in 2024?
Arbitrum is heading to a token launch event on March 16 where it will issue 1.1 billion ARB tokens. As a common risk, a sudden influx of tokens could lead to a huge selling pressure, which could cause the price of ARB to fall due to increased supply. Optimism will unlock 24.16 million OP tokens at the end of this month.
While ARB and OP may experience short-term volatility, their long-term growth looks promising, especially with several key milestones. Among these is Ethereum's expected Denkun update, scheduled for Q1/2024.
Dankun introduces EIP-4844 or Proto-Danksharding with call data blobs and call data charges. The proposal aims to significantly reduce gas costs and transaction times on the Ethereum mainnet. As a result, optimists like Optimism and Arbitrum will enjoy lower fees and faster transactions, which could lead to an improved user experience and attract more activity to these platforms.
In addition to Denkun, crypto ETF developments and the Bitcoin halving event are other highlights that could positively impact Arbitrum and Optimism, as well as the entire crypto market.
The approval of a spot bitcoin ETF could pave the way for other spot crypto ETFs like Ethereum or Ripple. According to Greenlight, this financial tool simplifies the process for traditional investors to get involved with popular cryptocurrencies, providing ways to track, trade and hold crypto through popular stockbroking channels.
Beyond accessibility, the ETF framework promises transparency and liquidity that could entice institutional investors. These experienced market participants, armed with significant capital, can leverage institutional investments into the crypto ecosystem to foster growth and innovation.
In particular, Layer 2 scaling solutions designed to increase Ethereum's efficiency, such as Arbitrum and Optimism, will greatly benefit from such an influx of institutional interest and capital. Over time, this could create more demand for ETH, as well as other tokens.
Regarding the next Bitcoin halving event, historical data paints an interesting narrative. Post-halving, Bitcoin experiences strong growth, often fueling broader market growth. This expected increase in the price of Bitcoin will further encourage developers and investors to explore and invest in Layer 2 solutions.
