LayerZero price experienced a significant reversal on Friday, wiping out gains made on Thursday following its airdrop. The token’s value dropped to $3 from a weekly high of $4.57, reducing its market cap to $745 million, below the $1 billion mark.

Market Context and Influencing Factors

The decline in LayerZero’s price occurred amidst a broader cryptocurrency market sell-off, with many tokens experiencing double-digit losses. Notably, Bitcoin fell below the critical support level of $64,000, and the total market cap of all tokens decreased to $2.33 trillion.

Contributing to LayerZero’s price drop was user dissatisfaction with the token’s proof-of-donation mechanism during its airdrop. Claimants were required to donate $0.1 to the Protocol Guild to receive tokens, a unique approach that faced criticism. Additionally, some users reported not receiving their allocations, prompting the developers to launch a platform for appealing and correcting these issues.

Impact of Liquidations

The decline also followed liquidations by some ZRO token recipients. Similar behavior was observed with zkSync recipients, who sold their tokens post-airdrop. This trend aligns with the typical trading pattern of tokens after airdrops. For instance, Sei token initially surged to $0.2128 before dropping to $0.09 and then rallying to $1.04. Similarly, Sui saw an initial rise to $1.4, a fall to $0.3, and then a climb to an all-time high of $2.10 within a year.

“Don’t want to make the same mistake with $ZRO as I did with $W, but < $3B FDV seems cheap if/when the market gets hot again.”

Despite these fluctuations, some traders who have incurred substantial losses are choosing to hold onto their tokens, anticipating a potential recovery.

Future Outlook

The future of LayerZero’s price will largely depend on the overall performance of the crypto market in the coming weeks. If Bitcoin continues its bearish trend and falls below $56,527, its lowest point in May, LayerZero’s price may continue to decline.

Altcoins generally exhibit a strong correlation with Bitcoin. Historically, altcoins have reached multi-year or all-time highs when Bitcoin hits its peak. Conversely, they tend to retreat when Bitcoin loses momentum.

Stay informed about the latest developments in the cryptocurrency market with more news and updates from Global Crypto News.

Post Views: 5