Lido Dao price to tank 25% as Fed’s preferred inflation measure ticks higher
|- 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.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.