Layer Zero’s ZRO token has declined 14% in 24 hours following a 45% weekly rally, hitting a major technical resistance level that has triggered six previous pullbacks. Technical indicators suggest overbought conditions, though a key token unlock event last week was initially met with strong buying pressure, leaving the broader bullish narrative intact.
The Layer Zero token ZRO has faced a sharp 14% decline over 24 hours after a bullish run that saw gains of up to 45%. Bears show no signs of backing off, with data suggesting the broader market could push prices lower.
ZRO has been trading within a consolidation channel defined by clear support and resistance zones. Its recent rally culminated in a sharp move into a major resistance level, where price faced immediate rejection.
This rejection likely stems from unfilled short and sell orders clustered around that threshold. This same region has triggered extended drawdowns on at least six previous occasions.
By averaging the magnitude of those past declines, ZRO could face a potential downside of up to 43% if market value continues to erode. On the derivatives side, the ZRO perpetual market recorded losses of roughly $233,000 after the price failed to breach the upper resistance.
Bollinger Band analysis shows ZRO currently trades in overvalued territory. The expected normalization typically takes the form of a pullback, a move already underway as selling pressure intensified.
Other indicators reinforce the overbought signal. The Parabolic SAR has formed dots above the price, a classic indication that bearish momentum is building.
Still, the Accumulation/Distribution indicator shows total volume remains positive at 57 million ZRO. This implies that despite the recent pullback, the broader market structure retains a bullish bias.
Despite near-term weakness, the broader bullish case for ZRO remains supported by recent price behavior during a major token unlock. On January 19, the team unlocked 2.4% of total supply, equivalent to 11.3% of circulating float, valued at approximately $46.74 million at the time, according to data.
Token unlocks typically introduce additional supply and can increase selling pressure. In ZRO’s case, however, both market volume and price trended upward immediately following the unlock, signaling strong positive sentiment.
Selling pressure began to meaningfully affect price on January 21, with volume-to-price trends ticking lower. This suggests the ongoing move may represent a corrective phase rather than a prolonged bearish reversal.
Overall, market sentiment remains a decisive factor. Any significant shift in buying or selling pressure across the broader crypto market will likely influence altcoins such as ZRO.
