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The Polyhedra Network token, ZKJ, experienced a significant price rebound on Monday, following a sharp decline of over 87% on Sunday. The token was trading at $0.374, marking a 47% increase from its lowest point this week. Despite this recovery, its market capitalization stands at $101 million, a significant drop from last week’s high of $620 million.
What Caused the ZKJ Token Crash?
The Polyhedra Network attributed the crash to a series of abnormal on-chain transactions involving the ZKJ/KOGE trading pair. In a statement on social media, the Polyhedra team reassured its community by emphasizing the strength of the network’s fundamentals and its commitment to ongoing development:
“The fundamentals of Polyhedra remain strong, both in our technology and in the incredible support from our community. We’re continuing to build and push forward as planned.”
Binance also weighed in, attributing the crash to large token holders removing on-chain liquidity. Data revealed that three wallets collectively drained approximately $7 million in liquidity. According to a Bitunix analyst, this activity was part of a coordinated strategy:
“On-chain analysis revealed that three major wallets executed a coordinated ‘liquidity pull + targeted dump,’ first crashing KOGE, then triggering ZKJ’s collapse — a classic bull trap. Warning signs emerged beforehand: LP withdrawals, plunging APYs, and reduced wash trading.”
Upcoming Token Unlock and Market Concerns
The crash in ZKJ’s price also coincides with investor caution ahead of a scheduled token unlock on June 19. Tokens worth over $10 million are set to be released, with allocations directed toward ecosystem incentives, foundation reserves, community development, and early token buyers. This unlock could increase selling pressure in the short term, further influencing the token’s price trajectory.
Is the Current Rebound a Dead-Cat Bounce?
The recent rebound in ZKJ’s price has sparked interest among investors looking to “buy the dip.” However, analysts caution against optimism, warning that this movement could represent a bull trap or a dead-cat bounce. A dead-cat bounce refers to a temporary price recovery in a downtrend before the asset resumes its decline.
Historical parallels, such as the case of the MANTRA token, illustrate this risk. MANTRA’s token experienced a 90% drop in a single day, followed by a brief 500% surge, only to resume its downward trajectory. A similar pattern could emerge with ZKJ as existing holders exit their positions, leading to renewed selling pressure.
The Bitunix analyst further highlighted the challenges facing ZKJ:
“Confidence in ZKJ has collapsed — without clear capital inflows, a rebound is unlikely. Cease wash trading or arbitrage strategies, and stay alert to tokens with high FDV, suspiciously stable prices, or abnormal rankings.”
ZKJ Technical Analysis: Bearish Patterns Ahead?
From a technical perspective, ZKJ’s price chart suggests the possibility of forming a rectangle or triangle pattern as the token consolidates. These formations could develop into bearish flags or pennants, signaling further downside potential. If this bearish scenario unfolds, the next likely support level for ZKJ lies at $0.20.
Investors should remain cautious and monitor market developments closely. The cryptocurrency market is inherently volatile, and understanding key patterns and warning signs is crucial for navigating these fluctuations effectively. As always, perform due diligence and consider consulting financial experts before making investment decisions.
