Selling the rumor? Biggest Ethereum Merge staker Lido DAO loses 40% in 30 days

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The Lido DAO (LDO) has fallen by more than 40% in the past 30 days and further declines in the coming days amid a potential sell-the-news event, ie the merge.

Lido DAO Ether Deposits up 160% in 2022

According to the latest data, Lido The DAO is Ethereum’s largest staking service, having deposited over 4.14 million of the blockchain’s native asset, Ether (ETH), in an Ethereum 2.0 smart contract on behalf of its users.

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The total value of ETH 2.0 staked by the provider. Source: Glassnode

In comparison, the Lido DAO had a total stake of around 1.6 million ETH earlier this year. The boom reflects the growing demand for Lido DAO services ahead of Ethereum’s scheduled transition from Proof-of-Work to Proof-of-Stake via a merge on September 15th.

LDO, a governance token in the Lido DAO ecosystem, has gone through an unprecedented price rally in recent months, gaining over 350% since its June low of $0.39.

Nevertheless, the coin’s sharp correction over the past month now raises the possibility of an extended downtrend as the pre-merge hype nears its end. In addition, a technical setup also alerts you of a possible price drop.

LDO signals on descending triangle reversal

The latest selling period in the Lido DAO market began on August 13th after LDO peaked at $3.10. This downtrend has painted a pattern that appears to be a descending triangle.

Descending triangles forming at the top indicate bullish exhaustion. Theoretically, a descending triangle breakout below the lower trendline could cause the price to crash to a level of length equal to the maximum triangle height.

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The LDO is now testing the lower trendline area of ​​the triangle (~$1.79-$1.82) as support. The coin could drop to $1.17 if it breaks below the support level along with an increase in trading volume. In other words, a drop of 35% from current price levels.

The LDO/USD daily price chart is characterized by a descending triangle breakdown setup. Source: TradingView

Conversely, a rally from the $1.79-182 support area could result in LDO testing the ascending trend line of the descending triangle near $2.10 as resistance.

Furthermore, a decisive breakout above the upper trendline would risk invalidating 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 involves risk, so you should do your own research when making a decision.