Friday 19 August 2022
Home / Algorithmic Stablecoins / Lido DAO: Ethereum’s biggest Merge staker soars 400% in July — but technicals flash warning

Lido DAO: Ethereum’s biggest Merge staker soars 400% in July — but technicals flash warning

Lido DAO (LDO) price has skyrocketed by roughly 400% month-to-date to reach $2.22 on July 28, its highest level in over two months.

LDO Mergified

LDO price has benefited majorly due to its association with Ethereum, the leading smart contract platform by total-value-locked (TVL) and market capitalization.

Notably, LDO serves as a governance token inside the Lido DAO ecosystem, a project that offers staking services for Ethereum.

The staking practice allows users to earn passive income without needing to sell their coins. It also helps validate transactions and secure the blockchain. In return, the protocol offers stakers rewards in the form of new tokens minted and fees collected.

Lido DAO working mechanism. Source: Official Website

Ethereum could become a full-fledged proof-of-stake blockchain by Sept. 19, the tentative date for the Merge. A successful transition to proof-of-stake could mean more demand for Lido DAO services in the future.

Lido DAO has remained the leading Ethereum staking service provider since August 2021. As of July 28, it had had put 4.14 million Ether (ETH) in the Merge’s official deposit contract Eth2 via its staking contracts.

ETH 2.0 total value staked by provider. Source: Glassnode

That somewhat explains LDO’s 140%-plus rally two weeks after the Merge’s release date announcement — from $1.29 on July 14 to $2.22 on July 28.

LDO/USD daily price chart. Source: TradingView

False breakout risks

Despite solid fundamentals, LDO’s ongoing rally risks trapping bulls, primarily due to a growing divergence between its price and momentum.

On a daily chart, LDO’s price rise accompanies a drop in its relative strength index readings, suggesting that bulls may lose their grip on the market while letting bears take over.

Same clues emerge from the ongoing divergence between the rising LDO price and its falling volumes, as shown below.

LDO/USD daily price chart featuring price-RSI and price-volume divergence. Source: TradingView

Therefore, LDO market hints at an imminent correction, with its interim downside target at around $1.75, down 17% from the price on July 28. This level coincides with the 0.382 Fib line of the Fibonacci retracement graph shown in the chart below.

LDO/USD daily price chart. Source: TradingView

On the other hand, LDO appears to have been breaking out of a “bull pennant,” a bullish continuation pattern whose profit targets are measured after adding its preceding uptrend’s height (flagpole) to the breakout point.

Related: Experts yet to explain massive spike in ETH active addresses

That puts Lido DAO en route to over $3.00 by September, which coincides with the 0.786 Fib line and potentially around the time of the Merge rollout. In other words, LDO could rally 45% from current price levels if the bull pennant pattern plays out.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should conduct your own research when making a decision.

About Sean Patterson

Check Also

Cardano Pulls Up 5% In 24 Hours, Unfazed By Vasil Hard Fork Delay

Cardano (ADA) had no problems pulling off a 5% spike in roughly 24 hours despite the delay of the Vasil Hard Fork upgrade. Analysts forecasted that the hard fork can help ease Cardano out of its bearish stance but it seems the coin didn’t struggle a bit despite the postponement. Over the past 24 hours, Cardano’s value has jumped by 5% as it now trades at $0.58% in sync with the current crypto market price momentum. Over the past couple of weeks, ADA was seen to have fluctuated wildly as the coin’s being jerked sideways brought about by the mounting buying and selling pressure. In all likelihood, ADA seems to be mirroring the current crypto market trends as it adds and shaves off value. Vasil Hard Fork Moved For August Launch Vasil Hard Fork was supposed to be launched in June and then moved to the end of July. However, IOG, Cardano developer, made some announcements that there will be some delays and the upgrade will be rolled out by August to give way to smooth transitions in networks. According to Kevin Hammond, Technical Managerof IOHK, the purpose of the delay is to ensure that everyone is all set for the upgrade including API developers, stakeholders, and exchanges. This upgrade will set the stage allowing many developers to easily build on Cardano. Still, ADA outlook remains to be optimistic as the network constantly works to improve the network. And this upgrade is expected to push the token up to its next target of $1. Everyone is banking on the likelihood that ADA price will spike once the upgrade is launched similar to what happens following upgrades on other DeFi tokens. Cardano Unable To Keep Up With Strong Crypto Recovery? Cardano has developed a strong community that supports the coin following the rollout of smart contacts. It’s only Achilles heel at this point would be the recent crashes that assailed ADA’s value. Nevertheless, Cardano was able to muster an all-time high back in 2021 when the coin surged at $3.10 but it was a flash in a pan, as the price declined shortly. The plunge continued yet stopped when ADA’s value hit $0.51 as it has been trending with the observation that it may not be able to keep up with the recovery that the crypto market is enjoying at the moment. And so, the bearish sentiment continued for ADA. The CoinMarketCap community has predicted that Cardano will most likely trade at $0.7311 come August 31 of this year. Others forecast that ADA may surge by 19% in August. ADA total market cap at $17.7 billion on the daily chart | Source: Featured image from Cryptocurrency News, chart from

Leave a Reply

Your email address will not be published. Required fields are marked *