Following a widely reported airdrop event, ZKsync (ZK) saw a sharp 22% decline in price, signaling a stormy turn for the cryptocurrency market. This development emphasizes the unpredictability and difficulties that fresh token launches and airdrop tactics in the cryptocurrency sector encounter.
An airdrop was held by ZKsync, a Layer 2 scaling solution for Ethereum that uses zero-knowledge rollups to encourage adoption and appreciate early investors. The airdrop was a component of a larger plan to encourage network engagement and build a robust ZK token community.
Free ZK coins were given to participants who fulfilled certain requirements, such as possessing a certain quantity of Ethereum or being involved in the ZKsync ecosystem. It was widely anticipated that the release of ZK tokens would spark more interest and activity, raising the token’s value. But the airdrop’s aftermath presented a different image.
Analyst Calls Airdrop A Double-edged Sword, Cryptocurrency Community Hails ZKsync
The cryptocurrency community has responded to ZKsync’s quick price drop differently. Several investors expressed dissatisfaction and disappointment since they expected a price increase following the airdrop instead of a decline. Freelance cryptocurrency analyst Rachel Adams has called the Airdrops a “double-edged sword.”
She said they may thrill users and draw in new ones, but there’s a chance that recipients would sell their tokens right away, which would result in sharp price reductions. Concerns about how price reductions and sell-offs may affect ZKsync’s larger ecosystem have been expressed.
The Layer 2 solution, which promises to increase scalability, lower transaction costs, and boost overall network efficiency, has been hailed as a game-changer for Ethereum. The participating addresses have sold 495.8 million units of their ZK, valued at over $109.6 million as of press time.
Investors have taken this path with the hope of making significant profits. The number of investors who have taken this path is small, but the bear in the market has compelled many wallets to protect their profit.
Data Says 30% Of Wallet Addresses Hold Back Their Assets
The CEO of blockchain company Renzo, Emily Zhao, proposed that lock-up periods or a staggered distribution strategy for tokens that are airdropped to reduce the possibility of large sell-offs. It is recommended that projects contemplate incorporating measures that incentivize recipients to retain their tokens for extended durations.
This strategy is believed to have the ability to support market stability and match participants’ goals with the project’s long-term viability. ZK token was expected to become the biggest airdrop in the industry in 2024, considering the many major bullish activities surrounding it.
Some of these events are Ethereum ETF, Bitcoin halving, and the approval of the Spot Bitcoin, which further raised the chances. Investors take different approaches, considering their strategy to sell their tokens immediately after the trade opens.
Data from the ZK airdrop dashboard by Nansen says that 30% of the total addresses have held back their assets. 41% out of the rest, 70% were sold out entirely during the ZK airdrop, and 29% of the investors temporarily sold their assets.
Most Underperforming Airdrops Linked to Volatile Market Trend
The cryptocurrency market’s volatility is affecting most airdrops’ performance – and, by extension, affecting some investors’ plans to sell for gains. This scenario was first noticed in March 2023 and during Arbitrum token airdrop. During this airdrop, the company recorded 74% ARB token sales in less than a week.
The news of a bear in the ARB market affected the token’s price, causing it to open trade at an official rate of $10.29 but fall to $1.3 in days. The growing market volatility and unfortunate legislative policies happening in the cryptocurrency industry, and during the time of the Arbitrum token, have been linked to the current investor’s bearish strategies.
The price of ZK opened at $0.289 on June 17 but reached an all-time high of $0.309. Unfortunately, the price continues to drop, causing ZK to drop by 22%. The token trades at $0.220 at press time and displays a strong will to bounce back over time.