Arena Mode Matchmaking Issue

This is the way those arenas work. It is not a bug. There is no matchmaking. You simply cycle through the players that are near your rank. If you have climbed to a point where everyone had better squads and fleets than you, you need to improve your roster. Power level is irrelevant. You can look up some guides on YouTube to help you decide which teams to chase.

Once you unlock Grand Arena Championships, that will be the primary PvP game mode where you earn crystals. There you will be matched on "Skill Rating," which is essentially people with the same win/loss ratio as you. I am earning you now though, that game mode may be extremely frustrating at first, because it's currently set up to allow peoplr who don't participate to fall all the way down the ladder. So you may face people with rosters far larger than yours.