Lido (LDO) Faces Selling Pressure as Whales Rearrange Portfolios
The crypto market is seeing a shake-up as several large investors, known as whales, adjust their portfolios. One notable move was the recent divestment of Lido (LDO) tokens by Alex Svanevik, CEO of Nansen. He cleared all 3 million LDO tokens from his wallet, valued at $2.89 million, and deposited them into Coinbase. This follows a trend of whales adjusting their LDO holdings since the second quarter of 2024, with Svanevik’s move representing the largest outflow from his wallet to date.
Other whales are also actively trading LDO. Coinbase Prime has been involved in high-frequency transactions with two millionaire whale wallets, while Jump Trading has been engaging in similar activity between Gate.io and Bybit. These transactions suggest potential buying interest as LDO prices correct.
However, LDO has been under pressure recently, sinking to $0.95 after the latest market slide, reflecting the weakness of Ethereum (ETH). The token also faced $152,000 in long liquidations, with only $1,100 in short liquidations. This suggests that LDO is considered risky until further liquidations are cleared.
The selling pressure from large wallets has also pushed ETH down to $2,361.39. The token is facing further pressure from hacker wallets, which are starting to mix their haul from WazirX and Penpie, totaling 17,800 ETH.
Adding to the bearish sentiment is the recent movement of ETH from Metalpha, a newly established crypto finance firm. Metalpha, previously known as Dragon Victory International Limited, removed 5,994 ETH from its staking position and transferred it to Binance. This transaction, likely intended for a sale, was followed by a 2.3% price slide for ETH.
Despite the recent selling pressure, LidoDAO remains the most liquid DeFi protocol, locking in over $23 billion in value. However, the total value locked has fallen from its peak of over $40 billion in March, reflecting the overall bearish sentiment towards ETH.
The un-staking from LidoDAO continues, with another large pending transaction for 6,997 ETH as of September 6. A previous transaction for 3,157 ETH has already been waiting for 32 hours. The longest withdrawal time to un-stake ETH from LidoDAO has reached 34 hours. Unstaking through the protocol takes longer, and some may choose to use a decentralized exchange (DEX) for a small price loss.
The Ethereum Foundation also moved 1,000 ETH, most likely for decentralized swapping into DAI. A total of 15,973 stETH is in the withdrawal queue as of September 6, which is still small compared to the total supply of over 9 million stETH.
The slowdown in the Ethereum network’s fee production is another contributing factor to the slower liquid staking. Smaller base fees and priority fees are reducing validator earnings, while also slowing down demand for staking ETH. The Ethereum network needs to find a way to tap the earnings of Layer 2 (L2) protocols. Currently, L2 protocols can utilize the Ethereum network cheaply or with low fees, retaining most of their protocol earnings. This model may change if L2 protocols attract enough traffic to require more Ethereum block space.
Overall, the sentiment towards ETH remains heavily bearish. The token faces low interest from ETF buyers and low confidence in the main blockchain as a source of fees. While the network’s inflation has inched slightly lower after increased token burns, it still produces over 16,000 new ETH weekly. With low enthusiasm, all withdrawals and divestments in the Ethereum ecosystem serve to accelerate the bearish sentiment.
