ZKSync’s ZK token was officially launched on June 17, 2024, through listings on several major crypto exchanges worldwide and an airdrop. Unfortunately, the community didn’t warmly receive the launch as the price dropped significantly within a day, around 37.5% from the initial launch price. The decline was driven by a lot of negative sentiment around the ZK token, effectively filtering out community members who were truly loyal to ZKSync.
3 Reasons for the ZK Token Drop
1. Immediate Selling Post-Listing on Binance
The first major reason for the significant drop in ZK’s price was its listing on Binance. This listing made it easier for airdrop recipients to sell their tokens immediately. When ZK was listed, Binance experienced a slight hiccup, delaying the listing by about an hour. During this hour, the price of ZK saw a small appreciation of about 4%. However, once officially listed and tradeable on Binance, the price plummeted.
The sellers in this scenario were primarily airdrop recipients who immediately sold their tokens when trading opened on June 17, 2024. Many of these sellers sought to profit from the airdrop rather than support ZKSync in the long term.
2. Negative Sentiment and Community Complaints
The negative sentiment around ZK was exacerbated by complaints from community members who felt the airdrop was unfair. The main issue was Sybil attacks, where some people felt cheated because they didn’t receive the airdrop, while others got larger allocations with less effort. Despite ZKSync’s team addressing these concerns, dissatisfaction lingered, leading to viral hashtags like #ZKSyncScam and $ZKScam on social media.
This situation eroded trust in ZK among some casual investors, directly contributing to the price drop. Furthermore, according to DeFillama, the Total Value Locked (TVL) in DeFi on ZKSync’s main network, ZKSync Era, also declined, adding to the overall negative atmosphere.
3. Market Dynamics and TVL Decline
Currently, the sentiment around ZK is quite negative, but this situation also serves to filter out the community members who are genuinely loyal and deserving of rewards from ZKSync. This loyal core is essential for the ecosystem’s long-term growth and support.
Is There Still Hope?
These loyal community members will continue to support ZKSync, helping to drive its ecosystem. Although the current sentiment is negative, things could change with upcoming developments and increased adoption.
ZKSync is distributing its ZK token allocation to its ecosystem, hinting at the possibility of a second airdrop, this time from the projects built on ZKSync. This potential airdrop could generate positive sentiment and drive ZK adoption in the coming months.
Additionally, the team behind ZK is actively promoting adoption, which could attract more projects to its ecosystem. With new projects and direct guidance from ZKSync, the ecosystem will expand, increasing the demand for ZK not just for transaction fees but for other transactions as well.
At present, the situation for ZK is quite concerning, with its market capitalization dropping dramatically from around $1 billion to approximately $700,000. However, trading volume remains high, although most of it is from selling activity.
Despite the current downturn, this isn’t the end for ZK. For holders looking to keep their ZK tokens, it might be wise to hold on through this negative phase, as it could last for a while. With the potential arrival of a bull market, the price could eventually rise, so holders might need to be patient and wait it out.
