(written on 17 Feb, 2023)

One of the most voted tokens on our Telegram for doing an on-chain review is LDO. So now we write an insightful blog reviewing its on-chain metrics. Please note that you should read sections 2, 3, and 4 carefully.

Summary

• The recent rise in LDO's price may be due to new investors in LDO following the #LSD trend.
• Giant funds have long-term faith in LDO, and currently, they are not looking to accumulate more but seeking liquidity for selling, so there is still a possibility of further announcements and news to attract money.
• Smart money bought early and began taking profits. A particular smart whale trader in LDO only accumulated but did not sell LDO. We posted about this on February 16th, and this smart whale trader may be waiting for the next TP (target price).

P/s: The famous smart whale trader who traded $5M up to $12M that we previously shared once also traded LDO (with 100% ROI) but is no longer trading LDO.

1. TRADING VOLUME

Looking at LDO's trading volume in the past year (in the picture), we see that in the three price increases:

• Phase 1 had an insignificant volume, and few people bought at the peak, so it would not significantly affect the upcoming price movement, unlike Phase 2 below.
• Phase 2 had a large trading volume, and the investors who joined and became the liquidity in Phase 2 have now returned to profit if they still hold. Therefore, at this point, some investors may balance their portfolios by taking profits or changing tokens, creating strong resistance levels at this stage.
• Phase 3's volume is significant, so it will be easy to absorb the selling volume of those who held in Phase 2.

So, are there any investors accumulating or selling LDO? We will analyze the behavior of investors in section 2.

2. TOP INDIVIDUAL WALLETS WITH LARGE BALANCE CHANGES

DataFi evaluated the 40 individual wallets with the most significant balance changes in the last 30 days and identified three groups:

Graph showing the changes in LDO balance in the EOA wallets of the three groups (classified according to wallet’s age) in the past 30 days

Data was compiled and processed by DataFi from Nansen.

(1) Group 1: These wallets first traded LDO in 2021.

• This group is taking profits, and they all reduced their balance (withdrawn to Coinbase or Binance).
• DataFi checked, and most of these wallets are from early LDO buyers such as Three Arrows Capital, Terraform Labs, Jump Trading, Alameda Research.

(2) Group 2: These wallets first traded LDO in 2022.

• This group took profits in the past month, with buy-in levels ranging from $0.5 to $2.5.

(3) Group 3: The group of wallets that conducted their first LDO transaction in 2023.

• This group is a buying group, which has accumulated around 28 million LDO ($77 million) over the past 30 days. In the last 7 days, this group has continued to accumulate an additional 1,735,962 LDO ($4.7 million).
• This indicates that there is still FOMO (fear of missing out) on LDO in the market.
• This activity has started to decrease as the amount accumulated this week only accounts for 6.1% of the total new accumulation in the previous month.

Therefore, the recent increase in LDO price was partly due to investors FOMO following the story of Liquid Staking tokens (LSD) benefitting from the Ethereum Shanghai upgrade event. In other words, Group 3 provided liquidity for Groups 1 and 2. So, if the LSD trend this time cannot attract new money, Group 3 wallets are in a weak position and will need to manage their capital tightly.

3. SMART MONEY WALLETS

• Balance: The amount of LDO held by smart money has been decreasing since August 2022 as shown below:

Balance of smart money

Source: Nansen

• DEX trading: Smart money wallets that bought in the $1.2 - $2.2 range in January 2023 are now taking profits, indicating that they were only speculating in the short term.

LDO trading activity by smart money on DEX from 01/2023 to present

Source: The DataFi Dashboard on Flipside

So, if you believe in the concept of smart money, what would you do?

4. ACTIONS OF THE BACKERS

Giant funds tend to hold LDO for the long term. Except for 2 funds with unstable financial situations, Terraform Lab and Three Arrow Capital, which transferred LDO to Coinbase in the past 30 days, possibly indicating a sell-off.

Amount held by smart money

Source: Nansen

After receiving their vesting, large funds are holding a significant amount and have no need to accumulate more.

The current holding ratios of some funds are as follows:

• Paradigm: 70 million LDO (~$190 million), accounting for 7% of the total supply.
• Dragonfi: 26.7 million LDO (~$72 million), accounting for 2.7% of the total supply.
• Wintermute: 9 million LDO (~$24.3 million), accounting for 0.09% of the total supply.

Therefore, large funds are not accumulating more LDO, once again indicating that the recent LDO price increase was due to the market FOMO.

On the other hand, large funds all have a long-term hold strategy for LDO. What they want is to find liquidity sources for the tokens they hold. So what we need to watch is whether the project's market makers are pushing up the price. Read this in section 5.

5. ACTIONS OF THE MARKET MAKERS

There are two major market makers for LDO which are Wintermute and Jump Trading.

Wintermute wallet: Received 10 million LDO (~$27 million) from vesting and has not shown any signs of selling. Only a small portion has been transferred to exchanges such as Kraken, Coinbase, and Binance to provide liquidity and for arbitrage purposes.

Amount held by Wintermute Trading

Source: Nansen

Jump Trading wallet: Has begun gradually transferring LDO to CEX exchanges since January 26, 2022, after receiving 5.5M LDO (~$15M) on May 11, 2022. This may be a profit-taking action and provide liquidity to users as the demand for LDO trading increases.

The amount of LDO held by Jump Trading.

Source: Nansen

BONUS: MARKET ANALYSIS

On the weekly chart (W)

Currently, the chart is in an overbought area, attempting to create a higher low structure, but with signs of rejection when closing candles, indicating selling pressure at the previous high area.

It is necessary to monitor supply and demand at this level. If there is demand without supply, the price will target the next levels of resistance.

On-chain signals are indicating that smart traders are distributing their holdings. However, long-term holders such as funds’ wallets are not showing significant changes, which could be due to their expectations for higher price targets or long-term investments.

→ It is necessary to monitor the funds’ behavior in the coming period to reinforce hypotheses about the behavior of funds/smart traders.

On the daily chart (D)

The chart is showing signs of distribution and selling pressure weakening. Expectations for a price increase are only to the level of resistance at 3.5xxx, followed by a continuation of the correction trend.

Buying and selling at this level is risky because there is no clear confirmation of a trend. Therefore, it is necessary to consider before placing an order.

We hope this article provides more information for your LDO investment plan. Remember to provide feedback and share this article with more LDO holders.