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With the upcoming Ethereum Shanghai hard fork in April, which will allow ETH to be withdrawn from the deposit contract for the first time in over two years, Lido Finance (LDO) has been singled out by many experts as one of the biggest beneficiaries of the upgrade. The liquid staking protocol has the largest market share among all providers.
Rumor Sends LDO Price Down South
For now, however, a rumor has massively hurt LDO’s price. As claimed by David Hoffmann, host of the popular crypto podcast Bankless, numerous DeFi platforms reportedly received a Wells Notice from the U.S. Securities and Exchange Commission (SEC) last week. Such is considered a notice of impending criminal proceedings by the U.S. financial regulator.
Hoffman named decentralized staking provider Lido Finance as the recipient of a Wells Notice in the most recent episode of his podcast. Shortly thereafter, however, he corrected himself.
According to the statement, representatives of Lido had informed him that no such SEC warning is currently in effect. Hoffman apologized for spreading the rumor.
The podcaster justified his mistake, however, with “a miscommunication between me and a lawyer friend”. But the latter had nonetheless confirmed to him that the SEC had recently issued “at least one” written warning to a DeFi platform.
So, although the rumors about Lido were not confirmed for the time being, the price of the LDO token has plummeted 25% since last Tuesday. Over the last seven days, it’s down 18%.
Despite this, the fundamentals for Lido Finance remain very strong. According to data from IntoTheBlock, Lido Finance is the market leader in liquid staking. About 33% of all ETH staked sits on the platform. Coinbase follows Lido Finance by a wide margin. Rocket Pool is the next largest protocol for ETH staking after Coinbase and has a share of 2.3%.
In addition, Lido Finance is one of the largest DeFi projects with the highest Total Locked Value (TVL). According to DefiLlama, the platform’s TVL is currently over $9.14 billion.
Lido Finance Token – Buy The Dip?
The LDO price was as high as $3.26 on Tuesday, and on Saturday, the Lido FInance token was trading above $3.00 before plummeting to as low as $2.42 on the same day. With this and the upcoming Shanghai hard fork, a good buying opportunity for LDO has apparently arisen – if it weren’t for the rumor of possible SEC actions against staking providers.
Currently, LDO price is holding in the important support zone between $2.52 and $2.62. However, the confirmation of the rumor could massively hurt the price, and the bears could target the $1.90 level first.
In this respect, the price seems to have been deprived of momentum for the time being. Buyers have to ask themselves whether they want to take the risk of a SEC action.
Should the bulls regain the upper hand, resistance at $3.00 would be an important step to retarget last week’s local high.
