Lido DAO (LDO) is down over 40% in the last 30 days, and it may drop further in the coming days, due to a potential sell-off event, i.e. the Merger.
Lido DAO Ether Deposits Soar 160% in 2022
Lido DAO is the largest Ethereum staking service, having deposited over 4.14 million of the blockchain’s native asset, Ether (ETH), into the Ethereum 2.0 smart contract on behalf of its users, according to the latest data.
By comparison, the total staked amount of Lido DAO was around 1.6 million ETH at the beginning of this year. The boom reflects growing demand for Lido DAO services ahead of Ethereum’s scheduled transition from proof-of-work to proof-of-stake. through the merger on September 15.
LDO, a governance token in the Lido DAO ecosystem, has also seen an unprecedented price rally in recent months; has risen more than 350% after bottoming out at $0.39 in June.
Nevertheless, the token’s sharp correction in the past month raises the possibility of the downtrend extending now that the pre-merger hype is coming to an end. In addition, a technical set-up also alerts to a possible price decline.
LDO hints at a descending triangle reversal
The latest market sell-off period for Lido DAO began after LDO reached a high of $3.10 on Aug. 13. This downtrend has drawn a pattern that appears to be a descending triangle.
Descending triangles forming at the top suggest bullish exhaustion. Theoretically, a breakout of the descending triangle below the lower trend line could drop the price to the level of length equal to the maximum height of the triangle.
LDO is now testing the lower trendline zone of the triangle (~$1.79-$1.82) as support. The token could drop towards $1.17 if it breaks below the support level accompanying a surge in trading volumes. In other words, a 35% drop from current price levels.
On the contrary, A bounce off the $1.79-1.82 support zone could see LDO test the upper trendline of the descending triangle around $2.10 as resistance.
Also, a decisive break above the upper trend line could invalidate the bearish setup discussed above.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move carries risk, so you should do your own research when making a decision.
Keep reading:
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.