Lido whales have been selling their Lido holdings after regulatory scrutiny from the SEC.
The US Securities and Exchange Commission filed a lawsuit against Consensys last week, accusing Lido's staking services of being unregistered securities.
The price of Lido dropped significantly after the news of the SEC lawsuit.
Lido might still see a price increase if it can break above $1.75.
However, the price could drop further if Lido exceeds $1.75 support.
According to recent developments in the crypto market, it might be time to leave Lido.
According to recent insights from SpotOnChain, the whales have been dumping their Lido holdings, especially after a wave of regulatory scrutiny from the US Securities and Exchange Commission over the cryptocurrency's status as an "unregistered security".
Let's see the whales' outlook on $LDO and whether it is worth holding on to in the short to medium terms.
According to a recent report from SpotOnChain, seven wallets simultaneously dumped their $LDO holdings within four hours on Wednesday this week.
SpotOnChain notes that wallet 0xd7c was the first to dump its tokens on Binance, depositing nearly 1 million LDO worth $1.68 million.
SpotOnChain notes that this whale initially bought around 2.428 million LDO on May 30 for $5.64 million at an average price of $2.324 per token.
However, in the last few days, this whale sold all of its tokens at an average price of $1.923 per token (worth $4.57 million), resulting in a loss of around $973,000.
The other two addresses, 0x287 and 0x7Ee, were likely from the same entity. After holding for just one month, they deposited around 2.26 million LDO, worth approximately $4 million, at a loss of around $1 million.
Finally, the addresses 0xBD0 and 0x423 sold their 1.25 million LDO tokens at an average price of $2.289, losing around $643,000 in the process.
Overall, these whales sold around $12 million worth of tokens, all of them dumping at significant losses from their buying prices.
But why would these whales be willing to sell millions of tokens at losses?
The answer might lie with the SEC.
Between June and at the time of writing, the SEC has gone after Consensys, the company behind the MetaMask.
This lawsuit has had a ripple effect on the rest of the market, considering how it now names the two largest Ethereum staking providers, Lido and Rocket Pool, as “illegal services”, offering “unregistered securities”.
The lawsuit against Lido
“Specifically, Consensys has offered and sold tens of thousands of securities for two issuers: Lido and Rocket Pool." The SEC lawsuit reads, "The Lido and Rocket Pool staking programs are each offered and sold as investment contracts and, therefore, securities."
This FUD from the ongoing Consensys lawsuit might have caused a wave of FUD with these whales, pushing them to liquidate their positions to stem further losses.
The whale sell-offs occurred around July 3, which saw a price decline of around 35% between June 28, when the SEC first filed the lawsuit, and June 3, as shown below:
Lido’s price action
However, Lido also appears to be trading on top of a short-to-medium-term ascending trendline and should ignite an upward rally if the bulls manage to push prices past the $1.75 price level.
If we happen to see a recovery from this price level, Lido should target the next available resistance around $2.55, which would present a 45% price increase to the upside.
However, if prices decline decisively below this $1.75 price level, the decline will undoubtedly continue, leading Lido further down towards $1.47 or even lower.
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