The recent crash in the ZKJ token price by Polyhedra has shaken the cryptocurrency industry, wiping out nearly $500 million in just a few hours. Let's delve into the reasons behind this surprising event and its implications for investors and the project.
According to official announcements, a series of unusual transactions involving the ZKJ/KOGE trading pair triggered this regrettable incident. The Binance platform reported a liquidity cascade phenomenon where significant holders massively withdrew tokens from the liquidity pool. This action led to a 60% collapse in the Polyhedra cryptocurrency price, dropping from $1.92 to $0.076 in just an hour and a half.
On-chain analysis revealed that six whales emptied 5.23 million Polyhedra tokens, initiating the price collapse. These investors first withdrew liquidity from the ZKJ and KOGE pools, then massively sold ZKJ. This move triggered the liquidation of long positions worth $97.72 million and short positions worth $4.61 million.
Currently trading at $0.3322, the ZKJ token has a market capitalization of $92.28 million, down by 91% from its peak. This dramatic drop has left the crypto community shocked, with many questioning the project’s future.
An upcoming release of 15.5 million ZKJ tokens on June 19 could exert additional selling pressure and lead to further declines. Moreover, allegations of planned market manipulation are circulating, casting doubt on the stability and transparency of Polyhedra.
Polyhedra has communicated that “the project fundamentals remain strong” despite the setback. As a reminder, Polyhedra aims to create a AI supercomputer using ZKP technology and ZkBridge.
They have also stated that an investigation is underway, but the damage has already shaken investors who are rightly disappointed with the project.
In summary, the recent ZKJ token debacle raises crucial questions about the solidity of DeFi projects. Investors must exercise caution and conduct their own research before exposing themselves to such volatile assets. The cryptocurrency market remains a minefield, requiring a deep understanding to avoid massive losses.
As we await further updates from Polyhedra and the relevant authorities, the crypto community closely monitors the situation’s development to best adjust their investment strategy.
Charles Ledoux is a Bitcoin and blockchain technology specialist. A graduate of the Crypto Academy, he has been a Bitcoin miner for over a year. He has written numerous masterclasses to educate newcomers to the industry and has authored over 2,000 articles on cryptocurrency. Now, he aims to share his passion for crypto through his articles for InvestX.
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