Lido DAO Confirms Reclaim of Support – LDO Price Can Reach $3.10 Next

Key Takeaways

• Lido DAO’s Total Value Locked (TVL) is approaching its all-time high of $39 billion.
• The ongoing LDO price increase reclaimed a 700-day diagonal support trend line.
• Is this reclaim the beginning of a longer-term LDO upward movement toward $3?

Lido DAO is by far the biggest liquid staking protocol, leading the TVL race by $35 billion. Most of the TVL in Lido DAO comes from the liquid staking token stETH, with over 35 billion staked . The liquid staking token for MATIC, stMATIC is in second place at $90 million.

The LDO price has corrected since its all-time high in January but regained its footing in May, possibly because of positive Ethereum ETF rumors. The reclaim of a long-term support trend line leads to the possibility that the Lido DAO price bottom is in. If so, where are the next areas of interest for LDO?

LIDO Dao’s Positive Close Confirms Reclaim

The LDO price has traded inside an ascending parallel channel since June 2022. During this time, both the resistance and support trend lines have been validated numerous times. In fact, even the all-time high price of January (red icon) was a test of the channel’s resistance trend line.

However, LDO has fallen since. In April, it briefly broke down from the channel’s support trend line, and even closed below it in May. However, an upward movement started next week, leading to a bullish engulfing candlestick in the final week of May. This confirmed the ongoing bounce and reclaimed the channel’s support trend line.

While the RSI and MACD do not confirm the reversal yet, they have started to trend upward. As a result, the most likely future outlook is an increase toward the channel’s midline and the $3.10 horizontal resistance area.

What to Make of Lido DAO’s Increase?

The LDO price has traded inside an ascending parallel channel since its launch in June 2022. The price reached the channel’s resistance trend line for the final time in January 2024 (red icon), leading to a yearly high price of $4.04. The LDO price has been correcting since then.

The decrease led to a low of $1.50 in March, seemingly causing a breakdown from the channel. However, LDO bounced immediately afterward, creating a long lower wick (green icon).

Even though LDO broke down and closed below the channel again in the beginning of May, it started another upward movement this week, reclaiming the channel’s support trend line. While a weekly close is still needed to confirm the reclaim, the support trend line is at $1.95, making it likely the LDO price closes above it.

Despite the reclaim, technical indicators still paint a bearish picture. This is visible in both the RSI and MACD, which trade below their bullish thresholds at 50 and 0, respectively. There is strong resistance at $3.10, created by a horizontal resistance area and the channel’s resistance trend line.

Before that, the In/Out Money indicator  shows notable volume of resistance between $2.41-$2.48, a likely level for an intermediate resistance area.

Lido DAO’s TVL Approaches All-Time High

The increased interest in Liquid Staking solutions and Lido DAO, the largest such solution on Ethereum is clearly visible when looking at the TVL for the protocol. The TVL reached an all-time high of $39 billion in March 2024. This was two months after the price reached its all-time high, emphasizing the divergence between the price and TVL.

LDO has one of the highest TVL to Market Cap ratios at 19, which suggests the protocol is still undervalued.

After a significant correction, the TVL is increasing again, and it is at $35 billion this week. At this rate, it will break its all-time high well before the price does so.

As outlined in the introduction, most of the TVL comes from stETH, which has gained popularity because of its widespread acceptance in Decentralized Finance (DeFi). Currently, Uniswap, Balancer, and Curve predominantly utilize it.

After Lido, Rocket Pool is in second place with $4.5 billion. Despite its smaller TVL, our analysis also noted that Rocket Pool has a smaller discrepancy between its TVL and market cap at 9.0, a sign of a more proper valuation relative to LDO.

The difference in TVL is likely the main reason why stETH is accepted even in centralized exchanges such as Gate.io, HTX and Bybit, while its Rocket Pool counterpart rETH is only accepted in decentralized exchanges such as Uniswap, Balancer and Curve.

Even in Uniswap, the stETH/ETH pool has a 7-day volume of over $300 million, while rETH/ETH has only $73 million. 

The outperformance is also visible when looking at the LDO (orange) price side-by-side to RPL (white). Since their May bottom, LDO has increased by 27% relative to RPL’s 14%. The difference is even clearer in the past two days (black), when positive Ethereum ETF rumors caused an increase in ETH betas.

So, based on its on-chain readings and performance, Lido DAO is likely to maintain its dominance as the most used liquid staking protocol on Ethereum.

Lido DAO Price Prediction: Is the Correction Over?

The daily time frame LDO price chart suggests the correction is complete. The chart shows a completed A-B-C corrective structure. In it, waves A:C had a 1:1.61 ratio, the second most common in such corrections. Additionally, the entire movement is contained inside a descending parallel channel, also common in these structures.

The two most recent touches of the support trend line (green icons) were combined with bullish divergences in the RSI and MACD, further aligning with the bullish count. This was solidified with the breakout above the channel’s midline.

Interestingly, the channel’s resistance trend line is at $2.50, agreeing with the on-chain resistance from the In/Out Money indicator. A breakout above this area will confirm the correction is over. This could take the price to the long-term channel’s resistance trend line at $4.30. This would be a new all-time high price.

LDO Can Move Toward its All-Time High

There is ample evidence pointing to a LDO price rally coming from technical and on-chain indicators. The TVL increase, reclaim of diagonal support and lack of resistance above $2.50 point to a rally. Once LDO breaks out from its short-term channel, the road toward $3 and then a new all-time high will not present many obstacles.