Arbitrum's impressive growth in total value locked (TVL) and its position as the leading Layer 2 solution in the Ethereum ecosystem are fueling strong bullish sentiment among traders, according to Michaël van de Poppe. As of his analysis on December 7, 2025, Arbitrum has seen its TVL surge vertically over recent months, reaching levels comparable to the peak of 2021 despite many altcoins hitting all-time lows. This mispricing in the markets presents a compelling opportunity for traders eyeing ARB, with fundamentals pointing to significant upside potential. The TVL peaked at $3.8 billion just before the October 10 market crash, marking a 70% increase year-over-year, while transaction volumes continue to expand steadily. This dominance in the ETH Layer 2 space, combined with technical indicators like a bullish divergence, suggests a potential reversal that could drive ARB prices upward by 300-400%, bringing it closer to fair valuation based on underlying assets.

Fundamental Strength Driving ARB Trading Opportunities

Diving deeper into the fundamentals, Arbitrum's TVL expansion is a key metric for traders assessing Layer 2 scalability solutions. According to Michaël van de Poppe's insights from December 7, 2025, the protocol's TVL has not only recovered but exceeded previous highs, even as broader altcoin markets faced downward pressure. This resilience highlights Arbitrum's role in enhancing Ethereum's efficiency, reducing gas fees, and supporting decentralized applications. Traders should note that while ARB tokens have been printing new lows, the underlying network activity—such as growing transaction counts—indicates undervaluation. For those trading ARB/ETH or ARB/USDT pairs on major exchanges, this discrepancy between price and fundamentals could signal entry points around current support levels. Market indicators show that TVL growth often correlates with price recoveries in Layer 2 tokens, as seen in historical patterns from 2021. With Ethereum's ongoing upgrades potentially boosting Layer 2 adoption, ARB stands out as a prime candidate for portfolio allocation, especially for swing traders targeting mid-term gains.

Technical Analysis and Price Reversal Signals

From a technical standpoint, the bullish divergence mentioned by Michaël van de Poppe on December 7, 2025, is a critical signal for ARB traders. This pattern, where price makes lower lows but momentum indicators like RSI show higher lows, often precedes major reversals in cryptocurrency markets. Currently, ARB is testing key support zones, potentially setting up for a breakout if buying volume increases. Traders monitoring on-chain metrics should watch for spikes in daily active users and transaction fees, which have been climbing despite the price dip. In the context of the broader crypto market, Ethereum's price stability around $2,500-$3,000 levels as of late 2025 could provide tailwinds for ARB, given its close ties to ETH. Potential resistance levels to watch include $1.50 and $2.00, with a break above these possibly confirming the 300-400% upside projection. Volume analysis reveals that trading activity in ARB pairs has remained robust, with average daily volumes exceeding $500 million across platforms, underscoring liquidity for both spot and derivatives trading. This setup encourages strategies like dollar-cost averaging into dips or leveraging futures for amplified returns, always with risk management in mind.

Broader Market Implications and Cross-Asset Correlations

Looking at the bigger picture, Arbitrum's performance has implications for the entire Ethereum ecosystem and even correlations with stock markets, particularly tech-heavy indices like the Nasdaq. As institutional flows into crypto increase, driven by ETF approvals and regulatory clarity, Layer 2 solutions like ARB could benefit from heightened capital inflows. Michaël van de Poppe's December 7, 2025, commentary emphasizes how TVL peaks amid altcoin lows represent market inefficiencies ripe for exploitation. Traders should consider correlations with Bitcoin dominance, where a decrease often favors altcoins like ARB. In stock market terms, parallels can be drawn to AI-driven tech stocks, where underlying innovation drives value despite short-term volatility. For instance, if Ethereum rallies on positive sentiment from AI integrations in blockchain, ARB could see amplified gains. Broader market sentiment remains cautiously optimistic, with on-chain data showing increased whale accumulations in ARB. This positions it well for trading opportunities in a recovering market, potentially outperforming peers like Optimism or Polygon. Overall, the combination of strong fundamentals, technical setups, and ecosystem dominance makes ARB a focal point for traders seeking high-reward plays in the evolving crypto landscape.

In summary, the bullish case for ARB hinges on its unmatched TVL growth and Layer 2 leadership, as detailed by Michaël van de Poppe on December 7, 2025. Traders are advised to monitor key metrics like transaction volumes and price divergences for optimal entry and exit points. With potential for substantial upside, ARB exemplifies how mispriced assets in the altcoin space can yield significant returns, blending fundamental analysis with technical precision for informed trading decisions.