Lido DAO (LDO) has suffered a decline of around 40% with further chances of an upcoming fall in the upcoming days while the clock is ticking towards a potential sell-off-the-news-event in the cryptocurrency ecosystem ie. The Merge.
The downside risks have accelerated in the market due to a market sentiment that the event is a “sell-off-the-news-event” paired with a technical setup which is bearish in nature has resulted in a massive downside risk in the market for Lido DAO.
Massive surge in deposits
The biggest staking service of Ethereum is Lido Dao which has deposited around 4.14 million Ether which is the native asset of Ethereum into the upcoming Ethereum 2.0 smart contract. This has been done on behalf of the users of the blockchain network.
According to data the overall staked amount of Lido Dao averaged around 1.6 million ETH at the beginning of the year however subsequently there was a surge in the overall staked amount. This metric suggests the observation that the overall cryptocurrency ecosystem is witnessing a heavy demand for the service of Lido DAO in the wake of the upcoming scheduled transition of Ethereum from a Proof of work consensus mechanism to a Proof of stake consensus mechanism which will be executed through the Merge.
Apart from that the governance token of LidoDAO ie. LDO has been through an unprecedented price rally in the past few months. This resulted in the token going up around 350% after it had bottomed out at around $0.39 in the month of June.
However even though there are various positive metrics associated with LidoDAO the recent market correction signals towards the possibility that there are chances that the pre Merge hype is nearing its end resulting in massive extended downside across various sectors of the market.
Technical set-up hints towards LidoDAO potential price decline
After the price of LDO toppled around August 13 the token has been facing a latest selling period. This downtrend pattern has resulted in a descending triangle pattern in the markets.A Descending triangle pattern forming at a top means a bullish exhaustion in the market.
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