- Lido Dao price drops 4% on the back of rising PCE deflator.
- LDO set to be revalued lower as Fed will look to hike interest rates.
- With tighter financial conditions, risk assets are bound to sell off.
Lido Dao (LDO) price is tanking as traders are getting a gut punch from the US Personal Consumption Expenditures (PCE) index that arrived on Friday. The PCE is the preferred tool for the Fed to assess how inflation is doing. With an upward beat in every metric in January and an upward revision for the prior numbers, inflation appears quite sticky.
Lido Dao price drops under the weight of sticky inflation
Lido Dao price is sliding lower with equities and other cryptocurrencies as the US Dollar gains strength. The move comes after PCE numbers on Friday that point to rising prices and wages across the board in the United States. This means that the Federal Reserve will likely hike interest rates by 50 basis points in March.
LDO and other altcoins do not thrive well under tight financial conditions. As the Fed is set to crank up their monetary policy more than expected, LDO should follow a wild ride lower. Expect equities and LDO to tank further in the coming days with $2.20 as the best candidate to slow down the decline. $2 would then become the floor to underpin Lido Dao price action.
LDO/USD daily chart
The PCE deflator is just one economic data point, and other data elements in the coming weeks could instead confirm that inflation is still slowing down. If this sudden pickup in inflation is short-lived, expect a small turnaround in LDO with a pop back above $3. Depending on the Fed meeting in March, a breakout trade above $3.37 could materialise if the central bank slowly turns toward a dovish stance.
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