The cryptocurrency market experienced a significant downturn on Friday, with LayerZero's price suffering a harsh reversal, erasing all gains made on Thursday following its airdrop. The token's value plummeted to $3, down from this week's high of $4.57, causing its market capitalization to fall below the $1 billion mark, settling at $745 million.

LayerZero's Price Volatility

The crypto industry witnessed a major sell-off, with most tokens experiencing double-digit losses. Bitcoin, the market leader, dropped below the key support of $64,000, while the market capitalization of all tokens fell to $2.33 trillion. LayerZero's users expressed dissatisfaction with its proof-of-donation mechanism during the airdrop, which required token claimants to donate $0.1 to the Protocol Guild to claim tokens. Some users also reported not receiving their allocations, leading to frustration and liquidation of positions.

A Familiar Pattern

Despite the current decline, LayerZero's performance mirrors the typical trajectory of tokens after an airdrop. Historical examples include Sei, which rose to $0.2128 shortly after its airdrop, dropped to a record low of $0.09, and eventually rallied to $1.04. Similarly, Sui initially rose to $1.4, then tumbled to $0.3, and eventually jumped to an all-time high of $2.10 within less than a year. This pattern suggests that LayerZero's price may rebound in the future.

Trader Sentiment

Some traders who suffered losses are holding onto their tokens, anticipating a recovery. They believe that LayerZero's price will rebound when the crypto market recovers, citing the token's relatively low fully diluted value (FDV) of less than $3 billion. This sentiment is reflected in social media posts, with traders expressing their intention to hold onto their tokens until the market improves.

Market Dependence

LayerZero's price rebound is closely tied to the performance of the broader crypto market. If Bitcoin maintains its bearish trend and crosses $56,527, its lowest point in May, LayerZero's price will likely continue falling. However, if the crypto market recovers, LayerZero's price may rebound, mirroring the performance of other altcoins that tend to have a close correlation with Bitcoin.

In conclusion, LayerZero's price suffered a harsh reversal following its airdrop, erasing all gains made on Thursday. Despite the current decline, the token's performance mirrors the typical trajectory of tokens after an airdrop, suggesting a potential rebound in the future. The crypto market's performance will play a crucial role in determining LayerZero's price movement, with traders holding onto their tokens in anticipation of a recovery.