Lido DAO (LDO) price has rallied to its three-week high of $2.21 as of May 16, up 40% when measured from its local low of $1.57, set four days ago.
This impressive double-digit rally appeared on par with other major crypto assets, including Bitcoin (BTC) and Ether (ETH). However, LDO has far outperformed the broader cryptocurrency market (TOTAL), which is only up 4.5% since May 12.
But what are the reasons why Lido DAO is outperforming the rest of the cryptocurrency market right now? Let’s take a closer look at the top three factors that are probably driving the LDO price.
The return of Ethereum depositors after Shapella
The LDO price recovery coincides with positive net inflows into the Ethereum proof-of-stake (PoS) contract in recent days.
Lido DAO is primarily an Ethereum liquid staking platform. It allows users to pool their funds to become Ethereum validators, thereby bypassing the network’s requirement to deposit at least 32 ETH.
In April, Ethereum underwent a network upgrade called Shapella, which supports withdrawals of rewards from its staking contract. As a result, their PoS contract witnessed days where the amount of ETH withdrawals exceeded deposits.
For example, Net ETH staked with his PoS contract was 19.27 million ETH on April 11, one day before the Shapella update. The number fell to 90,704 a week later, followed by a steady recovery, according to data tracked by Nansen.
On May 16, the Ethereum PoS contract had more than 20 million ETH, underscoring the growing demand for liquid staking service providers like Lido DAO. The price of its LDO governance token likely benefited from the narrative.
For example, Lido DAO’s closest competitor RocketPool (RPL) has also soared 15% to around $50 when measured from its May 12 low.
Lido V2 mainnet launch
It should be noted that Lido DAO did not support full ETH withdrawals. Instead, it issued staked Ethereum (stETH), theoretically pegged to ETH at a 1:1 ratio, to users who could freely exchange it for other crypto assets via exchanges.
But that was until recently.
On May 15, Lido DAO released the mainnet version of “Lido V2”, which allows Ethereum stakers to burn their stETH and exit the protocol at a 1:1 ratio. Since the update, the LDO price is up 20%, or half of its 40% bounce so far.
Lido’s DAO whales have also supported LDO’s bullish move in the days leading up to the release of Lido V2. And, according to the Lookonchain data resource. This may suggest that the “buy the rumour” scenario may have contributed to the LDO price rally.
Due to the launch of Lido V2, we noticed 3 whales accumulating $LDO in the past week.
-0x9EA7 withdrew 724,822 $LDO($1.52M) from #Binance at $2.01.
-0x4E4e withdrew 655,641 $LDO($1.38M) from #Binance at $1.83.
– 0x9eda bought 570,883 $LDO with 974K $USDC at $1.71 on May 12. pic.twitter.com/S0cNUxpLw0
— Lookonchain (@lookonchain) May 16, 2023
Due to the release of Lido V2, we have noticed 3 whales accumulating $LDO in the last week.
– 0x9EA7 withdrew 724,822 $LDO($1.52M) from #Binance at $2.01.
– 0x4E4e withdrew 655,641 $LDO($1.38M) from #Binance at $1.83.
– 0x9eda bought 570,883 $LDO with 974K $USDC at USD 1.71 on May 12.
LDO Price Bullish Wedge Bounce
From a technical standpoint, the LDO 40% bounce started near the lower trend line of a prevailing falling wedge setup. Traditional analysts view a falling wedge as a bullish reversal pattern.
The LDO/USD pair has rallied in a similar fashion in recent history, with each bounce taking its price to the upper trend line of the wedge. Now that the price is hovering around the upper trend line again, LDO could enter a breakout phase or pull back to retest the lower trend line.
In the breakout scenario, the LDO price would rise to $3.35 in June 2023, which would be 50% higher than current levels. This target appears after adding the maximum height of the wedge to the potential breakout near $2.70.
On the contrary, the pullback scenario could see the LDO price near $1.56 in June 2023, 30% below current price levels. This level has served as support and resistance in the past.
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