What happened
It's been a wild day for crypto investors, but this time, for positive reasons.
The overall cryptocurrency sector has surged 6.7% over the past 24 hours, as of 11:30 a.m. ET on Wednesday. Arbitrum (CRYPTO:ARB) is among the key gainers today, moving 12.7% higher over the same time frame.
This move comes as Arbitrum reported today that it completed its airdrop of ARB tokens (worth more than $120 million) to projects that were built on the network. Since this airdrop was announced on April 23, Arbitrum has underperformed, though today's gains essentially wipe out all of this project's announcement-related decline.
So what
The entire crypto sector is seeing a surge in interest today, as a way for investors to hedge against what looks to be a more- protracted banking crisis than previously thought. First Republic (FRCB) saw its share price plunge this morning after the regional bank reported that more than $100 billion in deposits flowed out of the bank during the previous quarter. Accordingly, essentially any asset that's digital in nature is gaining today, as investors look for ways to diversify their portfolios and hedge against specific risks.
However, Arbitrum's outsize gain suggests that there's more to the story. The project's massive $120 million airdrop was cause for concern for many investors.
Much of this had to do with previous proposals, which would have allocated a significant chunk of this airdrop to Arbitrum's own treasury. And specific projects had suggested they would liquidate their Arbitrum holdings once the airdrop took place, something that drew the ire of the community, but also kept some investors on the sidelines.
However, with the airdrop out of the way, and what appears to be less-than-expected selling pressure seen on this token, investors appear to be taking a breath.
Now what
Arbitrum is a key scaling solution for the Ethereum (ETH -0.17%) network, allowing for faster and cheaper transactions on the world's largest decentralized-finance blockchain. Accordingly, this is a relatively early-stage digital currency that's surged in interest among many in the crypto community, as a result of its impressive adoption thus far.
However, concerns around this project's airdrop have certainly taken the air out of Arbitrum in recent weeks. With this headwind out of the way, it appears that many view Arbitrum as a way to play momentum-driven moves in this space, and see outsize gains.
I'll be keeping my eye on this project to see how it performs from here. But suffice it to say, today's move is certainly impressive, and not what I expected to see with Arbitrum.
