Lido ( LDO ) increased by 67% but the exuberant sentiment is at risk of peaking.

The native LDO Token of Lido – the largest decentralized staking platform on Ethereum has increased by 64% over the past week, leading the list of the strongest bullish cryptocurrencies in the last seven days.

However, both on-chain data and technical analysis indicate that this bullish trend may soon run out of steam, as many signs of exhaustion are emerging from the buyers.

Warning issued for LDO

According to data from Santiment, the weighted sentiment index of LDO has surged to 7.32 - the highest in the past nine months. This figure places LDO in the euphoric zone, an area that history shows often signals price corrections. This puts LDO at risk of losing some of its recent bullish gains.

The weighted sentiment index of LDO | Source: SantimentThe weighted sentiment index of an asset measures the overall positive or negative trend, based on both the volume of mentions on social media and the sentiment expressed in those mentions. When this index is negative, it is a bearish signal, as investors become increasingly skeptical about the short-term prospects of the token. This leads them to trade less, contributing to a deeper price decline.

Conversely, when the index is at a positive level, traders are discussing the asset more with an overall positive tone.

If the index continues to rise, as is the case with LDO, this could reflect strong confidence. However, excessive optimism often signals that the buyers seem 'overwhelmed'. Historically, spikes in this sentiment index often mark the end of an upward trend, as such high levels of euphoria indicate that the buyers may soon exhaust themselves, increasing the risk of a price reversal.

Additionally, the indicators from the relative strength index (RSI) of LDO on the daily chart also reinforce this bearish view. At the time of writing, the RSI of LDO is at 76.52 – in the "overbought" territory.

The RSI of LDO | Source: TradingViewThe RSI indicator measures the overbought or oversold conditions of an asset in the market, with values ranging from 0 to 100. A level above 70 indicates that the asset is in an overbought state and may soon decrease in price, while a level below 30 indicates that the asset is in an oversold state and could rebound.

The RSI index of LDO indicates that this altcoin is currently firmly in the overbought zone, implying that the buying pressure is at a high unsustainable level. This increases the likelihood that the price will enter a consolidation or correction phase, as investors begin to take profits.

The risk of buyer exhaustion is looming over LDO

As buyer exhaustion increases, LDO is at risk of dropping to $1.33. If this support level does not hold, the token could plunge further down to $1.01.

LDO price analysis | Source: TradingViewHowever, if buying pressure remains strong, LDO price could continue its bullish trend and exceed the $1.55 mark.

Minh Anh