Key Highlights
Lido’s value jumped by 21.53%, reaching $1.15, before settling back to $1.13. The surge in buying activity, involving over 60 million tokens, was sparked by BlackRock’s application for an Ethereum (ETHA) staking product.
Lido DAO (LDO) experienced a significant rally, climbing 21.53% to a two-month peak of $1.15. The price then slightly decreased to $1.13 as of the latest update.
This price increase pushed the altcoin’s market capitalization above $1 billion for the first time in two months. Simultaneously, trading volume soared by 219.9% to $471 million, indicating heightened interest and activity in the Lido network.
What caused this sudden surge in LDO’s value?
BlackRock’s ETHA Staking Application Fuels LDO Rise
The upward trend in LDO’s price is partially attributed to BlackRock’s recent submission to include staking functionality within its proposed Ethereum ETF (ETHA).
This development is particularly important for Lido because its platform facilitates a large portion of ETH staking activities. Consequently, the staking of ETH is anticipated to happen via LDO, a factor interpreted optimistically by many market observers.
The ability to stake ETH through a third-party could significantly increase demand for Lido’s stETH derivative tokens, strengthening its position in the Proof-of-Stake (POS) landscape.
Surge in Demand for Lido
Following BlackRock’s filing, investors swiftly moved to accumulate Lido.
Data from Coinalyze shows that on July 17th, Lido DAO recorded a buy volume of 48.6 million compared to a sell volume of 45.7 million.
Currently, the altcoin shows a buy volume of 15.3 million versus a sell volume of 13.4 million.
As a result, LDO has experienced two consecutive days with a positive buy-sell volume difference, registering at 2.8 million and 1.8 million, respectively.
Typically, greater buying volume signifies a robust conviction in the market, as investors actively seek to acquire the asset.
Profit-Taking Emerges
As LDO’s price increased, holders and investors began to take profits.
The Spot Netflow reached a six-month high of $5.2 million before declining to $2.77 million at the time of reporting.
Source: CoinGlass
A high Netflow value indicates a larger Exchange Inflow compared to Outflow, which suggests increased selling activity.
Consequently, the declining Stock-to-Flow Ratio for Lido Finance reveals a lessening scarcity.
According to Santiment, the SFR decreased to 26.4, indicating an increase in the amount of LDO readily available for purchase on Exchanges.
Source: Santiment
Typically, a diminished scarcity precedes a decline in price, as mounting sell pressure affects the asset’s value.
Can Lido Sustain its Bullish Momentum?
Analysis suggests that Lido’s robust uptrend is fueled by strong buying activity after positive announcements.
Correspondingly, the Relative Strength Index (RSI) for the altcoin surged to 78, reaching overbought conditions.
Additionally, the Directional Movement Index (DMI) increased to 41, indicating strong positive momentum that might continue.
Source: TradingView
These momentum indicators suggest that Lido might continue to appreciate in value.
However, for LDO to target $1.4, buyers must remain active and continue accumulating. Conversely, profit-taking poses a threat to the continuation of the uptrend, and if sellers overwhelm buyers, a price correction will likely occur.
Should LDO face rejection at its current level, it is expected to find support around $0.97.