The price of LDO rose more than 75% in the past week. With investors looking for profit, the bears may be gearing up for a re-entry.

Lido Finance’s governance token LDO saw a significant 78% price increase over the past week. This made LDO one of the best-performing cryptocurrency assets in terms of gains over the past seven days, according to data from CoinMarketCap.

Still on an uptrend as of press time, the price of LDO was up 29% in the past 24 hours. During the same period, LDO tokens worth $274 million were traded. This led to a significant increase in daily trading volume of over 500%

Read Lido Finance’s [LDO] Price Forecast 2023-24

With a market value to realized value (MVRV) ratio of 150.51% at press time, LDO was overvalued. The market value (the current price was $1.91) was significantly higher than the realized value (the price at which the asset was recently bought and sold).

This indicated that investors who split their LDO positions since the beginning of the year realized double returns on their investments.

Source: Sentiment

But how long will this go on?

A disadvantage in the making?

An assessment of the performance of LDO on a daily chart showed that bears may be preparing to re-enter the market. This could lead to a potential price drop of LDO.

Over the past nine days, key momentum indicators have risen steadily to rest at overbought highs at the time of writing. LDO’s Relative Strength Index (RSI) and Money Flow Index (MFI) were spotted at 77.96 and 93.37 at press time.

When an asset’s RSI and MFI are in the overbought territory, the asset’s price has been rising for an extended period of time. As a result, it may take too long, possibly indicating that a price correction or reversal is imminent.

At overbought highs, buyers in the market are typically exhausted and unable to initiate further price appreciation. Therefore, a downside in the price of LDO may appear on the horizon in the coming days.

Further, despite the price rally over the past week, LDO’s Chaikin Money Flow (CMF) has seen a downward trend since January 6. So, this could create a bearish divergence.

How many LDOs can you get for $1?

If the price of an asset is rising but the CMF is falling, this may indicate a bearish divergence between the asset’s price and underlying buying and selling pressure. This divergence means that the price of the asset may not hold and a price reversal or correction is imminent.

Finally, the price of LDO was significantly volatile at press time. The narrowness of the gap between the upper and lower bands of alt’s Bollinger Bands revealed this.

When the price of a cryptocurrency is highly volatile, it means that it is prone to rapid and significant price swings. Therefore caution is advised.

Source: LDO/USDT on TradingView

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