The ups and downs are nothing new for investors, and just a few days ago, the entire cryptocurrency market crashed, liquidating billions. However, the drop in the price of Polyhedra's ZKJ token is not directly due to that. Polyhedra claims that a series of "abnormal on-chain transactions" caused the drop.
According to official announcements, a series of unusual transactions with the ZKJ/KOGE pair triggered the incident. Binance claims it is a liquidity cascade, where the largest holders withdraw tokens from the liquidity pool.
As a result, the Polyhedra token plummeted 60% (from $1.92 to $0.076) in just an hour and a half, around 2:32 UTC. The drop continued and even recovered, but then cracked again. It is currently trading at $0.3322 after an 83% drop, with a market capitalization of $92.28 million. From its peak, the token has fallen 91%.
Lookonchain, an on-chain analysis platform, reported that six whales sold 5.23 million Polyhedra tokens, causing the drop. These whales first withdrew liquidity from ZKJ and KOGE, and then exchanged the latter for ZKJ before massively selling it. In addition to the loss of liquidity, $102 million was lost in the liquidation.
It is worth noting that the price of the KOGE token also plummeted alongside the ZKJ. ETH APPLE on X stated:
"The problem began when the KOGE fund ran out of USDT, preventing inactive investors from exiting their positions. This triggered a massive sell-off of KOGE in ZKJ."
CoinGlass liquidation data reveals that $97.72 million in long positions and $4.61 million in short positions were liquidated. Six traders lost $1 million each, and the remaining holders suffered significant losses.
The crypto community also associated the upcoming token unlocks as the main cause behind the collapse; others claimed it was a planned rise and fall.
Such a massive drop has left holders in shock. While some are waiting for recovery, others fear a further decline ahead of the upcoming token unlocks. An unlock of 15.5 million ZKJ is scheduled for June 19, which could create enormous selling pressure and further crash the price of the cryptocurrency.
Additionally, the platform's image is under scrutiny. If not resolved, it could cause long-term damage. However, no official resolution has been revealed yet, so the uncertainty surrounding this token is greater.
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