Highlights:
- zkSync drops 52% in a month due to Bitcoin correction and internal issues
- zkSync seems to be bottoming out as it establishes support at $0.13
- Bitcoin showing signs of a rebound could support zkSync’s rally
In the past 24 hours, zkSync (ZK) has experienced a significant downturn, dropping by 13% to trade at $0.1376. This recent selloff continues a month-long correction, where ZK has decreased 52%. The downturn can be attributed to broader market corrections and specific issues plaguing zkSync.
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Broader Market Impact
The cryptocurrency market as a whole has been facing a correction, with Bitcoin, the market leader, currently trading at a low of $54,000. This broader market decline has impacted many altcoins, including zkSync. However, the challenges facing zkSync go beyond the general market trends.
Allegations of Internal Misconduct
On June 18, an X account named soEasy tweeted allegations against zkSync, claiming internal malpractices. The tweet accused zkSync team members of using privileged access to gain profits, accumulating nearly 50 million ZK tokens.
The tweet read:
“In September, I discovered this issue and have been tracking it ever since. I have published all the data I have gathered on GitHub and Mirror. The data includes on-chain hash values, addresses, ZKSync team members, and their actions to seek profits using privileged access. Through interactions, they have acquired nearly 50 million ZK tokens.”
These allegations have stirred uncertainty and contributed to the ongoing selloff, exacerbating the impact of the broader market downturn. Although zkSync has refuted these claims, the damage to investor confidence has been significant.
Zksync-internal cheat
In September, I discovered this issue and have been tracking it ever since.
I have published all the data I have gathered on GitHub and Mirror. The data includes on-chain hash values, addresses, ZKSync team members, and their actions to seek profits using…
— soEasy (@Easy17182589) June 18, 2024
Positive Developments Amidst Turbulence
That said, zkSync has several positive developments that could propel it higher. Notably, Space and Time (SxT) partnered with zkSync. In a tweet, Space and Time expressed their excitement about the collaboration:
“The team at Space and Time (SxT) is proud to join the Elastic Chain ecosystem by building our own ZK Chain. zkSync’s Elastic Chain is a groundbreaking solution to Web3’s fragmentation problem, and SxT is excited to be at the forefront of this innovation. Today, we’re thrilled to announce the pioneering new capabilities our research team delivers to the @zksync ecosystem.”
This partnership highlights zkSync’s potential to innovate and address critical issues in the Web3 space. However, the broader bearish market sentiment has overshadowed these positive developments, and zkSync has yet to show significant signs of a rebound.
Technical Analysis: Signs of Stabilization
Analyzing the charts, ZK is displaying tentative signs of stabilization. After hitting a low of $0.126 earlier in the day, the cryptocurrency has established support at $0.13. Market analysts suggest that if Bitcoin rebounds and zkSync sustains its current momentum, the critical resistance level to watch would be $0.164. Breaking this resistance could signal a more substantial recovery for ZK.
Conversely, if Bitcoin continues its downward trend and ZK breaches the intra-day low of $0.126, it could drop below $0.10, significantly declining from its current levels.
Outlook: Cautious Optimism
Despite the turbulent market conditions, there are cautious signals that Bitcoin may be bottoming out at $54,000. If this scenario plays out, it could provide a supportive environment for ZK to stabilize and potentially rebound. The market remains on edge, with investors closely monitoring Bitcoin’s movements and any further developments regarding the allegations against zkSync.
Navigating Turbulent Waters
ZK finds itself at a critical juncture. The combination of broader market corrections and specific internal issues has placed significant pressure on its value. While recent partnerships and positive news offer some hope, the prevailing bearish sentiment in the cryptocurrency market continues to pose challenges. However, with Bitcoin appearing to have bottomed out at $54k, ZK could be headed for a rebound.
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